Accounts Receivable for Lisa Company at December 31, 2021 showed a balance of P1,500,000. The Allowance for Expected Credit Loss had a P45,000 debit balance before the year-end adjustment. Sales during the year totaled P16,400,000. An aging analysis which reflects lifetime expected credit loss shows that P75,000 of the outstanding accounts receivable are estimated to be uncollectible. How much is the amortized cost of the accounts receivable at December 31, 2021?
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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.
How much is the amortized cost of the accounts receivable at December 31, 2021?
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