# At the beginning of Year 3 Omega Company had a $52,000 balance in its accounts receivable account... ## Question: At the beginning of Year 3 Omega Company had a$52,000 balance in its Accounts Receivable account and a $1,400 balance in Allowance for Doubtful Accounts. During Year 3 Omega experienced the following events:  (1) Omega earned$220,000 of revenue on account. (2) Collected $230,000 cash from accounts receivable. (3) Wrote-off$1,000 of accounts receivable as uncollectible.

Omega estimates uncollectible accounts to be 4% of receivables.

Based on this information, the December 31, Year 3 balance in the accounts receivable account is:

a. $41,000. b.$40,000.

c. $52,000. d. None of the above. Same information as above. Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 unadjusted (current) balance in the allowance for doubtful accounts account (balance before expense recognition) is: a.$400.

b. $2,040. c.$2,400

d. $1,640 Same information as above. Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 ending balance in the allowance for doubtful accounts account (balance after expense recognition) is: a.$1,240.

b. $2,040. c.$1,000.

d. $1,640. ## Accounts Receivable: Accounts receivable is a short term asset account which is presented under the current assets section of the Balance Sheet. This refers to the amount of collectibles from trade customers. This has a contra-asset account called "allowance for doubtful account" which is deducted against its ending balance. ## Answer and Explanation: The answer is a.$41,000

 Accounts Receivable, beginning 52,000 Add: Revenue 220,000 Less: Cash collections (230,000) Les: write-off of Receivables (1,000) Accounts receivables, ending 41,000

The answer is a. $400  Allowance for doubtful accounts (ADA), beginning 1,400 Les: write-off of Receivables (1,000) Unadjusted balance in ADA 400 The answer is d.$1,640.