ABC had Accounts Receivable of P150,000 at December 1, 2023. The following transactions occurred during December of 2023: December 5-A customer paid P90,000 worth of receivables. December 10- Sold P350,000 worth of goods to XYZ for P500,000 receiving 60% of the bill in cash and the rest to be received at a later time. The terms of the sale is 2/10, n/30. December 15-XYZ returned P35,000 worth of goods which were billed for P50,000. December 20-XYZ paid the remaining balance. How much was debited/credited to Sales Return and Allowances on December 15? (positive if debited and negative if credited)
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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