1. At the beginning of Year 3 Omega Company had a $52,000 balance in its accounts receivable account and a $1,400 balance in allowance for doubtful accounts. During Year 3 Omega experienced the following events.
(1) Omega earned $220,000 of revenue on account.
(2) Collected $230,000 cash from accounts receivable.
(3) Wrote-off $1,000 of accounts receivable as uncollectible.
Omega estimates uncollectible accounts to be 4% of receivables. Based on this information, the December 31, Year 3 balance in the accounts receivable account is
a. $41,000.
b. $40,000.
c. $52,000.
d. None of the answers is correct.
2. Same information as above. Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 unadjusted (current) balance in the allowance for doubtful accounts account (balance before expense recognition) is
a. $400.
b. $2,040.
c. $2,400
d. $1,640
3. Same information as above. Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 ending balance in the allowance for doubtful accounts account (balance after expense recognition) is
a. $1,240.
b. $2,040.
c. $1,000.
d. $1,640.
Answers: 1
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