Question

Colorado rocky cookie company offers credit terms to its customers. at the end of 2018, accounts receivable totaled $705,000. the allowance method is used to account for uncollectible accounts. the allowance for uncollectible accounts had a credit balance of $48,000 at the beginning of 2018 and $29,000 in receivables were written off during the year as uncollectible. also, $2,800 in cash was received in december from a customer whose account previously had been written off. the company estimates bad debts by applying a percentage of 10% to accounts receivable at the end of the year.

Answer 1

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Answer 2

Answer:

ending receivables:  6,000,000

Explanation:

credit sales: 9,000,000

1% allowance:   90,000

net Accounts receivable

beginning     4,925,000

net sales       9,000,000

collection     (7,835,000)

allowance        (90,000)  

year-end:     6,000,000

When teh company does a write-off the net receivables doesn't change

as both, account receivable (assets) and allowance (contra-assets) for 100,000 Therefore the net receivables is not affected by this.