ABC Company has an allowance for uncollectible accounts balance of P34,000 at January 1, 2020. During 2020, accounts totaling P47,000 were written off. Accounts written off in prior years amounting to P7,000 were recovered during the year. At December 31, 2020, an aging of its accounts receivable showed: (See the picture attached) What is the net realizable value of the accounts receivable? A. P588,400 B. P594,400 C. P600,400 D. P606,400
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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