1. Sloan Company borrowed $8,000 on a line of credit on December 1 2021. Simple interest of 12% will be charged and no payment is required for 60 days. On December 31, the following adjusting entry was made: Interest Expense 80 Interest Payable 80 No reversing entry was prepared or posted. Sloan received a minimum payment bill from the bank for $160 due on January 30, 2022, which represents only an interest charge. Sloan makes a $500 payment on January 30. Enter the January 30 journal entry below:
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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