Alco Co uses the % of A/R allowance method $300,000 Ending A/R Balance Management estimates 4% uncollectible, AFDA has credit balance $3,000 before adjustment 1-What is the adjusting entry for Bad Debt Expense? What is impact to A=L+SE If FAIL to do adjusting entry, what is the impact on the acct. equation? 2-JE for $5,000 needs to be written off for customers who are unable to pay. What is impact to A=L+SE If FAIL to do adjusting entry, what is the impact on the acct. equation? 3-What is the Net Realizable Value of A/R before and after the write off?
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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