ABC Company’s record shows December 31 balance of P2,350,000 for its accounts receivable. The following may be considered for adjustments, if necessary: • Client X has paid its accounts payable to ABC for purchase of merchandise amounting P120,000. Two days after the full payment was made, Client X returned some of the goods due to wrong delivery, which amounts to P35,000, which resulted to Client X’s subsidiary ledger to have a negative 35,000 balance. ABC’s bookkeeper offset the amount from other accounts with debit balance. • Goods at a selling price of P200,000 was shipped before the end of the year under FOB Destination shipping term. Such amount was already recorded by ABC as sales for the period but at P220,000. On January 5, the customer informed ABC that they’ve just received the goods. • A customer’s check amounting to P75,000 was received a day before year-end to be applied to its account. The check was dated January 7 and it was applied by ABC upon receipt of the check. • A credit sales amounting to P50,000 dated December 30 was recorded on the same day at P5,000. • A cash sales for January 1 amounting to P23,500 was recorded on December because the book was held open up to January 15. • A customer’s check was returned by the bank on January 2 marked NSF. Such check was received from the customer on December 29 and was recorded. The amount indicated is P15,000. • A check amounting to P25,000, dated December 30 was received, recorded but undeposited. What is the adjusted balance of accounts receivable as of 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.
ABC Company’s record shows December 31 balance of P2,350,000 for its
• Client X has paid its accounts payable to ABC for purchase of merchandise amounting P120,000. Two days after the full payment was made, Client X returned some of the goods due to wrong delivery, which amounts to P35,000, which resulted to Client X’s subsidiary ledger to have a negative 35,000 balance. ABC’s bookkeeper offset the amount from other accounts with debit balance.
• Goods at a selling price of P200,000 was shipped before the end of the year under FOB Destination shipping term. Such amount was already recorded by ABC as sales for the period but at P220,000. On January 5, the customer informed ABC that they’ve just received the goods.
• A customer’s check amounting to P75,000 was received a day before year-end to be applied to its account. The check was dated January 7 and it was applied by ABC upon receipt of the check.
• A credit sales amounting to P50,000 dated December 30 was recorded on the same day at P5,000.
• A cash sales for January 1 amounting to P23,500 was recorded on December because the book was held open up to January 15.
• A customer’s check was returned by the bank on January 2 marked NSF. Such check was received from the customer on December 29 and was recorded. The amount indicated is P15,000.
• A check amounting to P25,000, dated December 30 was received, recorded but undeposited.
What is the adjusted balance of accounts receivable as of year-end?
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