The following information relates to a company's accounts receivable: accounts receivable balance at the beginning of the year, $300,000; allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales during the year, $1,500,000; accounts receivables written off during the year, $16,000; cash collections from customers, $1,450,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales, calculate the following:
1. bad debt expense for the year
2. year-end balance in the allowance for uncollectible accounts
If the company estimates that future bad debts will equal 10% of the year-end balance in accounts receivable, calculate the following:
1. bad debt expense for the year
2. year-end balance in the allowance for uncollectible accounts.