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At the beginning of year 3 omega company had a $60,000 balance in its accounts receivable account and a $3,000 balance in allowance for doubtful accounts. during year 3, omega experienced the following events. (1) omega earned $200,000 of revenue on account (2) collected $210,000 cash from accounts receivable (3) wrote-off $2,000 of accounts receivable as uncollectible omega estimates uncollectible accounts to be 4% of receivables. based on this information, the december 31, year 3 unadjusted (current) balance in allowance for doubtful accounts account (balance before expense recognition) is: ___________

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Anthougoidn

The December 31, year 3 unadjusted (current) balance in allowance for doubtful accounts account (balance before expense recognition) for Omega Co. is $1,920.

How is the ending balance for allowance for doubtful accounts determined?

The ending balance of allowance for doubtful accounts can be determined by recognizing the company's policy towards doubtful accounts.

Some companies use an estimate based on the accounts receivable, credit sales revenue, aging of receivables, etc.

Data and Calculations:

Allowance for Doubtful Accounts:

Beginning balance  $3,000

Accounts Write-off   (2,000)

Ending balance        $1,920 ($48,000 x 4%)

Bad Debts Expense  $920 ($3,920 - $3,000)

Accounts receivable:

Beginning balance   $60,000

Revenue earned = $200,000

Cash collected         (210,000

Write-off of accounts  (2,000)

Ending balance      $48,000

Thus, the December 31, year 3 unadjusted (current) balance in allowance for doubtful accounts account (balance before expense recognition) for Omega Co. is $1,920.

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