At December 31, 2026, Culver Imports reported this information on its balance sheet. Accounts receivable Less: Allowance for doubtful accounts During 2027, the company had the following transactions related to receivables. 1. 2. 3. 4. (a) $558,400 39,840 Sales on account Sales returns and allowances Collections of accounts receivable Write-offs of accounts receivable deemed uncollectible $2,885,000 72,500 2,622,900 42,170 Prepare a tabular summary that includes the following accounts: Cash, Accounts Receivable, Allowance for Doubtful Accounts Revenue, and Expense. Enter the January 1, 2027, balances in Accounts Receivable and Allowance for Doubtful Accounts. Decreases in assets, liabilities, or stockholders' equity require a negative sign or parentheses. - Increases in expenses require a negative sign or parentheses. - Increases to Allowance for Doubtful Accounts require a negative sign or parentheses.

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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.