Question

Black Corporation had a 1/1/17 balance in the Allowance for Doubtful Accounts of $21,000. During 2017, it wrote off $15,120 of accounts and collected $4,410 on accounts previously written off. The balance in Accounts Receivable was $420,000 at 1/1 and $504,000 at 12/31. At 12/31/17, Black estimates that 5% of accounts receivable will prove to be uncollectible. What should Black report as its Allowance for Doubtful Accounts at 12/31/17

Answer 1

$25,200

Step-by-step explanation:

Calculation to determine What should Black report as its Allowance for Doubtful Accounts at 12/31/17

Using this formula

12/31/17 Allowance for Doubtful Accounts=12/31 Accounts Receivable Balance*Estimated Uncollectibles accounts receivable percentage

Let plug in the formula

12/31/17 Allowance for Doubtful Accounts=$504,000*5%

12/31/17 Allowance for Doubtful Accounts=$25,200

Therefore What Black should report as its Allowance for Doubtful Accounts at 12/31/17 is $25,200