ABC Company’s statement financial statement shows a deficit on retained earnings amounting to P260,000. To eradicate the said deficiency, the company was to authorized by the commission to have the revaluation of its assets and liabilities. The following were the revaluation: a. The receivable balance will be decreased to P40,000. b. The total fixed assets from its book value of P1,900,000 shall be revalued for P1,500,000 and the P700,000 accumulated depreciation attached from the original book value shall be zero out. c. P50,000 of the other liabilities account shall not be recognized. Required: a. Prepare the necessary entries for the revaluation of assets and liabilities in the quasireorganization activity. b. Prepare the statement of financial position as of January 1, 2020 after the revaluation process.
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 statement financial statement shows a deficit on retained earnings
amounting to P260,000. To eradicate the said deficiency, the company was to authorized by
the commission to have the revaluation of its assets and liabilities. The following were the
revaluation:
a. The receivable balance will be decreased to P40,000.
b. The total fixed assets from its book value of P1,900,000 shall be revalued for P1,500,000
and the P700,000
zero out.
c. P50,000 of the other liabilities account shall not be recognized.
Required:
a. Prepare the necessary entries for the revaluation of assets and liabilities in the quasireorganization activity.
b. Prepare the
process.
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