Question

McGlone Corporation had a 1/1/17 balance in the Allowance for Doubtful Accounts of $40,000. During 2017, it wrote off $28,000 of accounts and collected $8,400 on accounts previously written off. The balance in Accounts Receivable was $800,000 at 1/1 and $960,000 at 12/31. At 12/31/17, McGlone estimates that 5% of accounts receivable will prove to be uncollectible. What should McGlone report as its Allowance for Doubtful Accounts at 12/31/17

Answer 1

$48,000

Step-by-step explanation:

The computation of the amount that should be reported as its allowance for doubtful accounts is shown below

= Ending balance of account receivable × uncollectible percentage

= $960,000 × 0.05

= $48,000

hence, the amount that should be reported as its allowance for doubtful accounts is $48,000

The above formula should be applied