What should be reported as allowance for doubtful accounts

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Point 1: The Willson Company starts operations in Year One. It makes sales of $600,000 in Year One and $800,000 in Year Two. Cash of $440,000 is collected in Year One while $600,000 is collected in Year Two. Accounts of $15,000 are written off as uncollectible in Year One while accounts of $22,000 are written off in Year Two. The company estimates that 5 percent of all sales will eventually prove to be uncollectible.

Question 1: On the company's balance sheet at the end of Year Two, what should be reported as the allowance for doubtful accounts?

Reference no: EM132483837

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