Rue Co.’s allowance for uncollectible accounts had a credit balance of $12,000 at December 31, Year 1. During Year 2, Rue wrote off uncollectible accounts of $48,000. The aging of accounts receivable indicated that a $50,000 allowance for uncollectible accounts was required at December 31, Year 2. What amount of uncollectible accounts expense should Rue report for Year 2?

 Rue Co.’s allowance for uncollectible accounts had a credit balance of $12,000 at December 31, Year 1. During Year 2, Rue wrote off uncollectible accounts of $48,000. The aging of accounts receivable indicated that a $50,000 allowance for uncollectible accounts was required at December 31, Year 2. What amount of uncollectible accounts expense should Rue report for Year 2?
$48,000
$50,000
$60,000
$86,000 Correct
 You Answered Correctly!
This answer is correct.  An examination of the T-account indicates the beginning balance in Allowance for uncollectible accounts has a credit balance of $12,000.  When an account is written off, a debit entry is made to the Allowance for uncollectible accounts.  If the aging schedule indicates that a $50,000 allowance is required, then the ending balance in the Allowance for uncollectible accounts must be $50,000. Therefore, this answer is correct because $86,000 ($12,000 − $48,000 − $50,000) must be debited to Bad debt expense and credited to the Allowance for uncollectible accounts.



The diagram shows a table for “Allowance for Uncollectible accounts.” There are two columns. The first column has the value 48,000. The second column, first row has the values 12,000 and 86,000 (highlighted) and in the second row 50,000.