UNCOLLECTIBLE ACCOUNT EXPENSE: CREDIT SALES METHOD. The Glass House, a glass and china store, sells nearly half its merchandise on credit. During the past 4 years, the following data were developed for credit sales and uncollectible account losses:

In 19x4 The Glass House expanded its line significantly and began to sell to new kinds of customers.
REQUIRED:
1. What is the loss rate for each year from 19x2 through 19x5?
2. Does there appear to be a significant change in the loss rate over time?
3. If credit sales for 19x6 are $392,000, what loss rate would you recommend to estimate uncollectible accounts?
4, Using the rate you recommend, record uncollectible account expense for 19x6. lol

Transcribed Image Text:

YEAR CREDIT UNCOLLECTIBLE OF SALES SALES ACCOUNT LOSSES 19x2 $197,000 $12,608 19x3 202,000 13,299 19x4 212,000 13,285 19x5 273,000 22,274 Totals $884,000 $61,466