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The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.

-What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement?
A)$5,700
B)$1,320
C)$4,080
D)$54,000

Question

[The following information applies to the questions displayed below.]

The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.

-What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement?
A)$5,700
B)$1,320
C)$4,080
D)$54,000

Quizplus · Accepted Answer

Uncollectible accounts expense = Revenue on account of $190,000 × 3% = $5,700

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