Question

During 2021, Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years. Jacobsen's December 31, 2020, allowance for uncollectible accounts was $40,000. Using the balance sheet approach, what amount of allowance for uncollectible accounts should Jacobsen report at December 31, 2021

Answer 1

Jacobsen should report an allowance for uncollectible accounts of $28,000 at December 31, 2021. This is calculated by adjusting the beginning balance of $40,000 by subtracting $18,000 written off and adding back $6,000 recovered during the year.

Step-by-step explanation:

To determine the amount of allowance for uncollectible accounts that Jacobsen should report at December 31, 2021, we need to adjust the opening balance of the allowance by the amounts written off and recovered during the year:

• Start with the beginning balance of the allowance for uncollectible accounts ($40,000).
• Subtract the amount written off during the year ($18,000).
• Add the amount recovered that had been previously written off ($6,000).

The calculation would be:

$40,000 (beginning balance) - $18,000 (written off) + $6,000 (recovered) = $28,000

Jacobsen should report $28,000 as the allowance for uncollectible accounts on the balance sheet at December 31, 2021, using the balance sheet approach.

Answer 2

$52,000

Step-by-step explanation:

Given that:

• The beginning balance of allowance for uncollectible amounts: $40,000
• $18,000 in receivables were written off (the balance increase)
• $6,000 in recovered the amount which were written off in 2019 (the balance decrease)

Hence, the ending balance of allowance for uncollectible amounts should Jacobsen report at December 31, 2021 by using the balance sheet is:

$40,000+$18,000 -$6,000

= $52,000

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