Belkou Company began operations on January 1, 2007. Its first year's sales were $1,160,000, which were 70% on credit. During the year, $710,000 was collected from customers on account, and the company wrote off accounts worth $2,700. At the end of the year, management estimated that 0.5% of all credit sales would probably be uncollectible.
During 2008, sales were $1,430,000 (75% on credit), collections on account were $1,045,000, and write-offs of receivables were $4,100.
At the end of 2008, after reviewing its experience with write-offs of accounts receivable thus far,management decided that its estimate of uncollectibility should be increased from 0.5% to 0.6% of the credit sales.
During 2008, sales were $1,430,000 (75% on credit), collections on account were $1,045,000, and write-offs of receivables were $4,100.
At the end of 2008, after reviewing its experience with write-offs of accounts receivable thus far,management decided that its estimate of uncollectibility should be increased from 0.5% to 0.6% of the credit sales.