At the end of 2019, Samar plc has accounts receivable of ￡900,000 and an allowance for doubtful accounts of ￡40,000. On January 16, 2020, Samar determined that its receivable from Omer ￡8,000 will not be collected, and management authorized its write-off. Instructions: Prepare the journal entry for Samar plc to write off the Omer receivable. What is the cash realizable value of Samar plc's accounts receivable before the write-off of the Omer receivable?
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 end of 2019, Samar plc has
accounts receivable of ￡900,000 and an allowance for doubtful accounts of ￡40,000. On January 16, 2020, Samar determined that its receivable from Omer ￡8,000 will not be collected, and management authorized its write-off.
Instructions:
- Prepare the
journal entry for Samar plc to write off the Omer receivable. - What is the cash realizable value of Samar plc's accounts receivable before the write-off of the Omer receivable?
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