Question

On January 1, 2011, Grace Company had a $15,500 balance in the accounts receivable account and a zero balance in the allowance for doubtful accounts account. During 2011, Grace provided $57,500 of service on account. The company collected $48,150 cash from accounts receivable. Uncollectible accounts are estimated to be 17% of sales on account. The amount of uncollectible accounts expense recognized on the 2011 income statement is:

A. $9,775
B. $9,500
C. $8,725
D. $10,000

Answer 1

The uncollectible accounts expense recognized on the 2011 income statement for Grace Company is calculated by multiplying the provided services on account ($57,500) by the uncollectible percentage (17%), resulting in $9,775.

Step-by-step explanation:

To calculate the amount of uncollectible accounts expense recognized on the 2011 income statement, we need to apply the given percentage to the amount of services provided on account. Grace Company provided $57,500 of service on account and estimates that 17% of sales on account will be uncollectible. Therefore, the uncollectible accounts expense for 2011 can be calculated as follows:

$57,500 (services on account) × 17% (estimated uncollectible percentage) = $9,775

So, the uncollectible accounts expense recognized on the income statement for 2011 would be $9,775, which corresponds to option A.