Question

Snead Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. What method does Snead Company use to adjust the allowance for uncollectible accounts?

1) Direct write-off method
2) Percentage of sales method
3) Percentage of receivables method
4) Aging method

Answer 1

Snead Company uses the aging method to adjust the allowance for uncollectible accounts based on the length of time the accounts have been outstanding.

Step-by-step explanation:

Snead Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. The aging method analyzes the accounts receivable based on the length of time they have been outstanding. By categorizing the accounts into different age groups, Snead Company can estimate the potential losses and adjust the allowance accordingly.