At December 31, Year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During Year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, Year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, Year 2, receivables may be uncollectible. What amount of allowance for uncollectible accounts should Gasp report in its December 31, Year 2, balance sheet?

Question

Ryan Joseph

Business

15 March, 19:09

At December 31, Year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During Year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, Year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, Year 2, receivables may be uncollectible. What amount of allowance for uncollectible accounts should Gasp report in its December 31, Year 2, balance sheet?

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Dylan Zhang · Answer 1

The amount of $50,000 will be reported as an allowance for uncollectible accounts for the Year 2 on December 31 in the balance sheet.

Explanation:

Under the approach of the balance sheet, the ending balance of the allowance for the uncollectibe accounts is the percentage (%) of the ending balance of the accounts receivable.

The amount of uncollectible accounts should reflect the aggregate nedded ending balance of the allowance which amounts to $50,000.

Therefore, the $50,000 is the amount to be uncollectible.