Question

During its first year of operations, Ellison, Inc. bills customers $18,000 for the services it provided. At the end of the year, $6,000 remains due from customers. The company’s credit manager estimates that 10% of the total year-end accounts receivable will not be collected. The company’s estimate of uncollectible accounts is:

Answer 1

The answer is: $600

Step-by-step explanation:

Accounts receivable: money balance owed to a company for the sale of products or services delivered, but still not paid by its customers.

Of the year's total sales, $12,000 had been fully paid and $6,000 remained as accounts receivable. The company estimates that 10% of accounts receivable will not be collected, equivalent to $600.