Accounts Receivable of the Fakler Manufacturing Co. on December 31, 1984, had a balance of $150,000. The allowance for doubtful accounts had a $4,500 balance. Sales in 1984 were $1,125,000 less sales discounts taken of $ 9,000. Pass the adjusting entry for estimated doubtful accounts expense, assuming: I. One half of 1% of 1984 net sales will probably never be collected. II. Two percent of outstanding accounts receivable are doubtful. III. An aging schedule shows that $7,500 of the outstanding accounts receivables are doubtful.
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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.
balance of $150,000. The allowance for doubtful accounts had a $4,500 balance. Sales in
1984 were $1,125,000 less sales discounts taken of $ 9,000.
Pass the
I. One half of 1% of 1984 net sales will probably never be collected.
II. Two percent of outstanding accounts receivable are doubtful.
III. An aging schedule shows that $7,500 of the outstanding accounts receivables are
doubtful.
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