Question

The miller company recognized $99,000 of service revenue earned on account during year 2. there was no beginning balance in the accounts receivable and allowance accounts. during year 2, miller collected $70,000 of cash from accounts receivable. the company estimates that it will be unable to collect 3% of its sales on account. the amount of uncollectible accounts expense recognized on the year 2 income statement was: multiple choice $2,100. $870. $2,970. $29,000.

Answer 1

To determine the uncollectible accounts expense, we need to find the amount of accounts receivable that the company estimates it will be unable to collect.

The Miller Company recognized $99,000 of service revenue earned on account during year 2.

During year 2, Miller collected $70,000 of cash from accounts receivable.

Therefore, the ending balance in the accounts receivable account is $99,000 - $70,000 = $29,000.

The company estimates that it will be unable to collect 3% of its sales on account.

Therefore, the estimated uncollectible accounts expense is 3% * $99,000 = $2,970.

So, the amount of uncollectible accounts expense recognized on the year 2 income statement is $2,970.

Therefore, the correct answer is $2,970.