Assume that Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for theperiod. Simple uses the aging method and estimates that the appropriate ending balance in theAllowance for Doubtful Accounts is $3,000. Before the end-of-period adjustment is made, theAllowance for Doubtful Accounts has a credit balance of $250. What amount of Bad Debt Expensewould the company record as an end-of-period adjustment?
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.
Assume that Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the
period. Simple uses the aging method and estimates that the appropriate ending balance in the
Allowance for Doubtful Accounts is $3,000. Before the end-of-period adjustment is made, the
Allowance for Doubtful Accounts has a credit balance of $250. What amount of
would the company record as an end-of-period adjustment?
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