The Miller Company earned $125,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $83,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.
What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement?
Multiple Choice
$3,750
$1,260
$2,490
$42,000