As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's gross accounts receivable have been uncollectible. During 2018, Farley wrote off $650,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2018 is $18,000,000. In its December 31, 2018, balance sheet, what amount should Farley report as allowance for uncollectible accounts

$360,000

Explanation:

The computation of allowance for uncollectible accounts is shown below:-

Allowance for uncollectible accounts = Accounts receivable × Gross accounts receivable percentage

= $18,000,000 × 2%

= $360,000

Therefore for computing the allowance for uncollectible accounts we simply multiply the accounts receivable with gross accounts receivable percentage. Rest cost is not relevant for computing the allowance for uncollectible accounts.