Milo Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $ 150 comma 000, and management estimates 4% will be uncollectible. Milo Company's balance of Allowance for Uncollectible Accounts after adjustments, was $ 5 comma 000. The following year, Milo Company wrote off $ 3 comma 000 of old receivables as uncollectible. What is the balance in the Allowance account now?

Revised balance = $8000

Explanation:

Milo Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $ 150 comma 000, and management estimates 4% will be uncollectible.

Milo Company's balance of Allowance for Uncollectible Accounts after adjustments, was $ 5 comma 000.

The following year, Milo Company wrote off $ 3 comma 000 of old receivables as uncollectible.

The Allowance account balance now will be:

Amount of Uncollectible Accounts for the year = 4% x $150,000 = $6000

Previous balance is $5,000 less amount written off $3000 = $2000

Revised balance = $6,000 + $2000 which is $8000

answer; hazards;

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