Question

On December 31, Year 3, Alpha Company had an ending balance of $200,000 in its accounts receivable account and an unadjusted (current) balance in its allowance for doubtful accounts account of $300. Alpha estimates uncollectible accounts expense to be 1% of receivables. Based on this information, the amount of uncollectible accounts expense shown on the Year 3 income statement is:______.

a. $2.300.
b. $2200.
c. $1700.
d. $2.000.

Answer 1

c. $1700.

Step-by-step explanation:

The computation of the uncollectible account expense is shown below:

= Account receivable × estimated percentage - unadjusted balance

= $200,000 ×1% - $300

= $2,000 - $300

= $1,700

hence the uncollectible account expense is $1,700

Hence, the correct option is c.

The same would be relevant