As of January 1, 2021, Farley Co. had a credit balance of $530,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's credit sales have been uncollectible. During 2021, Farley wrote off $646,000 of accounts receivable. Credit sales for 2021 were $18,800,000. In its December 31, 2021, balance sheet, what amount should Farley report as allowance for uncollectible accounts

$ 260,000

Explanation:

It is given that :

On Jan 1, 2021, Farley Co. have a credit balance = $530,000

Percentage of credit sales to be uncollectible = 2%

Accounts receivable = $646,000

Credit sales for 2021 = $18,800,000

Therefore, the amount reported as the allowance for the uncollectible accounts = ( 18,800,000 x 2% ) + 530,000 - 646,000

               = 376,000 + 530,000 - 646,000

                = 260,000

So the amount to be reported as the allowance for the uncollectible accounts = $ 260,000

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