(a) Assuming no Fair Value Adjustment account balanceat the beginning of the year, prepare the adjusting entryat the end of the year if Laura Company’s available-forsaledebt securities have a fair value $60,000 below cost.(b) Assume the same information as part (a), except thatLaura Company has a debit balance in its Fair ValueAdjustment account of $10,000 at the beginning of theyear. Prepare the adjusting entry at year-end.
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.
(a) Assuming no Fair Value Adjustment account balance
at the beginning of the year, prepare the
at the end of the year if Laura Company’s available-forsale
debt securities have a fair value $60,000 below cost.
(b) Assume the same information as part (a), except that
Laura Company has a debit balance in its Fair Value
Adjustment account of $10,000 at the beginning of the
year. Prepare the adjusting entry at year-end.
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