Balance sheet approach uncollectible accounts


Weiner Company's net credit sales were $500,000 during 2010. On december 21, the accounts receivable ending balance is $80,000. Assume the unadjusted balance of allowance for uncollectible accounts is a credit of $500 and that Weiner estimates that 7% of the accounts receivable will not be collected. Under the balance sheet approach, the ending balance of the allowance for uncollectible accounts is a percentage of the ending balance of accounts receivable. The uncollectible accounts identified by the aging schedule at year end reflect the total required ending balance of the allowance. Allowance for Uncollectible Accounts Receivable (Credit). A provision for that portion of accounts receivable that is estimated will not be collected. The account is shown on the balance sheet as a deduction from the Other Accounts Receivable account. 171: Inventories for Consumption.