At the End of the Year, a Company Has the Following

question 157

Essay

At the end of the year, a company has the following accounts receivable and estimates of uncollectible accounts: 1. Accounts not yet due $= \$ 70,000$ ; estimated uncollectible $= 4 \%$ .
2. Accounts $1 - 30$ days past due $= \$ 30,000$ ; estimated uncollectible $= 15 \%$ .
3. Accounts more than 30 days past due $= \$ 5,000$ ; estimated uncollectible $= 40 \%$ . Record the year-end adjustment for uncollectible accounts, assuming the current balance of the Allowance for Uncollectible Accounts is $1,200 (debit).

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Definitions:

Acid-Test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.

Marketable Securities

Financial instruments that are easily convertible into cash, such as stocks and bonds.

Inventory Turnover Ratio

A measure of how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of inventory management.

Quantity Discounts

Price reductions given to customers purchasing large volumes.