At 31 December 2002 A Co had the following balances: Trade Receivable 52000 Trade payables 60000 Sales Revenue 890000 Sales returns and allowances 5000 Allowance for uncollectible accounts (1/01/2021) 1000 During 2003 a customer was declared a bunkrupt and 200 should be written off via allowance method Provide extracts from balance sheet and income statement for 2002 if A co estimates allowance for uncollectible accounts to be 1% of net sales
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.
At 31 December 2002 A Co had the following
Trade
Trade payables 60000
Sales Revenue 890000
Sales returns and allowances 5000
Allowance for uncollectible accounts (1/01/2021) 1000
During 2003 a customer was declared a bunkrupt and 200 should be written off via allowance method
Provide extracts from
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