Uncollectible accounts; income statement approach
Response to the following problem:
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 receivable 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
(1) bad debt expense for the year and
(2) the year-end balance in the allowance for uncollectible accounts.