Asian Boss Corp. has the following data relating to accounts receivable for the year ended December 31, 2020: 500,000 Accounts receivable, January 1, 2020 20,000 Allowance for doubtful accounts, January 1, 2020 Sales during the year, all on account, terms 5/10, 3/15, n/60 2,400,000 2,500,000 Cash received from customers during the year 10,000 Accounts written off during the year An analysis of cash received from customers during the year revealed that P1,330,000 was received from customers availing the 10-day discount period, P388,000 from customers availing the 15-day discount period, P2,400 represented recovery of accounts written-off, and the balance was received from customers paying beyond the discount period. The allowance for doubtful accounts is adjusted so that it represents a certain percentage of the outstanding accounts receivable at year end. The required percentage at December 31, 2020 is 150% of the rate used on December 31, 2019. The doubtful accounts expense for 2020 is P8,064 OP7,824 OP5,984 DG 234
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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