16. Q Company has the following information on December 31, 20x1 before any year-end adjustments: Net credit sales, P2,000,000 Accounts receivable, December 31, P310,000 Allowance for doubtful accounts (before any year-end adjustments), P17,000 Percentage of credit sales 2% The aging of receivables is as follows: (days outstanding, receivable balances, and % uncollectible, respectively) 0-60 days, P90,000, 2% 61-120 days, P100,000, 3% Over 120 days, P120,000, 15% Q Company uses the percentage of credit sales in determining the bad debts monthly financial statements and aging of receivables for its annual financial statements. Accounts written off during the year amounted to P38,000 and accounts recovered amounted to P9,000. As of December 31, Q determined that P20,000 accounts receivable from a certain customer included in the “61-120 days outstanding group” is 94% collectible and P10,000 account included in the “over 120 days outstanding” group is worthless and needs to be written off. Doubtful accounts expense for the year shall be The correct answer is: 54,900 REQUIRED: Provide a step-by-step solution. *the final answer should be the same in the given.
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.
16. Q Company has the following information on December 31, 20x1 before any year-end adjustments:
Net credit sales, P2,000,000
Allowance for doubtful accounts (before any year-end adjustments), P17,000
Percentage of credit sales 2%
The aging of receivables is as follows: (days outstanding, receivable balances, and % uncollectible, respectively) 0-60 days, P90,000, 2%
61-120 days, P100,000, 3%
Over 120 days, P120,000, 15%
Q Company uses the percentage of credit sales in determining the
Accounts written off during the year amounted to P38,000 and accounts recovered amounted to P9,000.
As of December 31, Q determined that P20,000 accounts receivable from a certain customer included in the “61-120 days outstanding group” is 94% collectible and P10,000 account included in the “over 120 days outstanding” group is worthless and needs to be written off. Doubtful accounts expense for the year shall be
The correct answer is: 54,900
REQUIRED: Provide a step-by-step solution.
*the final answer should be the same in the given.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
