At 30 June 2022, the trial balance of XERO PTY Ltd contained the following amounts before adjustment: Debit O Accounts Receivable Dr $38900 Bad debt expense Dr $38900 O Bad debt expense Dr $18300 O Bad debt expense Dr $18300 Accounts receivable Allowance for Doubtful Debts Sales revenue Prepare the adjusting entry at 30 June 2022 for bad debts expense assuming that the ageing schedule indicates that $18300 of accounts receivable will be uncollectable. Ignore GST. Credit 389000 38900 778000 Allowance for Doubtful Debts Cr $38900 Allowance for Doubtful Debt Cr $38900 Accounts Receivable Cr $18300 Allowance for Doubtful Debt Cr $18300
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.
Subject - account
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