At the end of its first year of pperations, December 31, 2020, ABC Company had accounts receivable of P6,000,000, net of the related allowance for doubtful accounts. During 2020, ABC Company ecorded charges to bad debt expense of P900,000 and wrote off P200,000 of uncollectible accounts eceivable. On December 31, 2020, now much should ABC Company eport as accounts receivable before he allowance for doubtful accounts?
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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