ABC Corp had accounts receivable of P150,000 and allowance for bad debts of P12,000 at Jan 1. During the year ABC made sales of P1,000,000 (40% were cash sales), collected P410,000 (excluding recoveries) wrote-off P9,000 accounts. Bad debts recognized for the period was P15,000. How much is the carrying amount of the receivable at Dec 31? 351,000 331,000 311,000 279,000
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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