At the end of the annual reporting period, the accounts of Berry Company showed the following information: a. Sales Revenue for 2015, P180,000 of which one sixth was on credit. b. Allowance for doubtful accounts, balance January 1, 2015, P900 credit. c. Accounts receivable, balance December 31, 2015 ( prior to the write-off of uncollectible accounts during 2015), P18,050. d. Uncollectible accounts to be written off, December 31, 2015, P1,050. e. Aging schedule at December 31, 2015, showing the following breakdown of total accounts receivable: Status Amount % Uncollectible Not past due P10,000 .5% Past due 1-60 days 4,000 1% Past due over 60 days 3,000 8% Question: 1. During 2015, how much of the accounts receivable was collected? a. P12,500 b. P11,950 c. P10,950 d. P11,000 2. On total receivables at year-end, using the aging of accounts receivable, what is the entry to record bad debts expense ? a. Debit Bad debts expense 330; credit Allowance for bad debts 330 b. Debit allowance for bad debts 330; credit Accounts receivable 330 c. Debit accounts receivable 330; credit allowance for bad debts 330 d. Debit bad debts expense 330; credit accounts receivable 330.
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 the annual reporting period, the accounts of Berry Company showed the following information:
a. Sales Revenue for 2015, P180,000 of which one sixth was on credit.
b. Allowance for doubtful accounts, balance January 1, 2015, P900 credit.
c.
d. Uncollectible accounts to be written off, December 31, 2015, P1,050.
e. Aging schedule at December 31, 2015, showing the following breakdown of total accounts receivable: Status Amount % Uncollectible Not past due P10,000 .5% Past due 1-60 days 4,000 1% Past due over 60 days 3,000 8%
Question:
1. During 2015, how much of the accounts receivable was collected?
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