At the end of its annual accounting period, Midi Company estimated its bad debts as 0.67% of its $1,670,000 of credit sales made during the year. On December 31, Midi made an addition to its Allowance for Doubtful Accounts equal to that amount. On the following February 1, management decided that the $2,400 account of Catherine Hicks was uncollectible and wrote it off as a bad debt. Four months later, on June 5, Hicks unexpectedly paid the amount previously written off. Give the journal entries required to record these transactions. View transaction list Journal entry worksheet < 1 2 Record the entry for estimated bad debts. 3 4 Note: Enter debits before credits. Date Dec 31 Record entry General Journal Clear entry Debit Credit View general journal
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.
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