At the beginning of the year, Kullerud Manufacturing had a credit balance in its allowance for doubtful accounts of $6,161, and at the end of the year it was a credit balance of $31,425. During the year, Kullerud made credit sales of $890,000, collected receivables in the amount of $812,000, and recorded bad debt expense of $33,750. Compute the amount of receivables that Kullerud wrote off during the year.?
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 the beginning of the year, Kullerud Manufacturing had a credit balance in its allowance for doubtful accounts of $6,161, and at the end of the year it was a credit balance of $31,425. During the year, Kullerud made credit sales of $890,000, collected receivables in the amount of $812,000, and recorded
Compute the amount of receivables that Kullerud wrote off during the year.?
Account receivable means the amount due from customer whom we sold the goods on credit.
Allowance for doubtful account is made to show estimate expense of bad debts even when actual bad debts has not occurred yet.
It will reduce the account receivable and reduce the profits.
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