Determining account balances: percent of revenue allowance method
of accounting for uncollectible accounts
The following information pertains to Leslie’s Floor Store sales on account and accounts receivable.

Accounts receivable balance, January 1, 2012 $ 52,500
Allowance for doubtful accounts, January 1, 2012 4,725
Sales on account, 2012 925,000
Cost of goods sold, 2012 615,000
Collections of accounts receivable, 2012 835,000
After several collection attempts, Leslie’s wrote off $3,100 of accounts that could not be
collected. Leslie’s estimates that bad debts expense will be 0.5 percent of sales on account.
Required
a. Compute the following amounts.
(1) Using the allowance method, the amount of uncollectible accounts expense for 2012.
(2) Net realizable value of receivables at the end of 2012.
b. Explain why the uncollectible accounts