Question

Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $74,000 and $3,900, respectively. During Year 2, Allegheny wrote off $7,200 of Uncollectible Accounts. After aging its receivables, Allegheny estimates that the ending Allowance for Doubtful Accounts balance should be $6,000. What will Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement?

Answer 1

The 9,300 should Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement

Step-by-step explanation:

The non-collectible accounts expenses on its Year 2 income statement is shown below:

= Ending balance + write off balance - opening balance

= $6,000 + $7,200 - $3,900

=$9,300

The accounts receivable is not to be considered because we have to find out the uncollectible accounts expense, so the account receivable balance should not be taken in the computation part.

Hence, the 9,300 should Allegheny report as Uncollectible Accounts Expense on its Year 2 income statement