2. The tollowing is a summary of account receivable and related accounts for three years for Tommy Enterprise the financial year ends 30 April each year. Year ended 30 Account receivable as at 30 April (before writing off bad debts) RM 70,000 61,000 83,000 Bad debts written off Provision for doubtful debt April RM 2017 2018 2019 Nil 1,000 3,000 2% 2% 2% For the year ending 30 April 2017, 2018, 2019, show the: a) Provision for doubtful debts account b) Statement of Profit or Loss (extract) c) Statement of Financial Position (extract)
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.
Chapter : Receivables Accounting System
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