an excerpt from trial balance of ABC company shows the following: accounts receivable 1,000,000 allowance for bad debts 100,000 it is the company's policy to provide 2% of the net amount of accounts receivable as bad debts determine the following: 1. HOW MUCH IS THE AMOUNT OF ADJUSTING ENTRY FOR BAD DEBTS BASED ON COMPANY'S POLICY 2. WHAT IS THE ACCOUNT TO BE CREDITED ON ADJUSTING ENTRY? 3. HOW MUCH IS THE NET BALANCE OF ACCOUNTS RECEIVABLE AFTER THE ADJUSTMENT? CHOOSE FROM THE FOLLOWING ACCOUNTS FOR THE JOURNAL ENTRIES: bad debts expense accounts receivable allowance for doubtful accounts
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.
an excerpt from
allowance for
it is the company's policy to provide 2% of the net amount of accounts receivable as bad debts
determine the following:
1. HOW MUCH IS THE AMOUNT OF
2. WHAT IS THE ACCOUNT TO BE CREDITED ON ADJUSTING ENTRY?
3. HOW MUCH IS THE NET BALANCE OF ACCOUNTS RECEIVABLE AFTER THE ADJUSTMENT?
CHOOSE FROM THE FOLLOWING ACCOUNTS FOR THE
bad debts expense
accounts receivable
allowance for doubtful accounts
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