At the end of the current year, the unadjusted trial balance of Branco, Inc., indicated $5,835,000 in Accounts Receivable, a credit balance of $9,100 in Allowance for Doubtful Accounts, and Sales Revenue (all on credit) of $160,500,000. Based on knowledge that the current economy is in distress, Branco increased its bad debt rate estimate to 0.3 percent of credit sales. 1. What amount of bad debt expense should be recorded for the current year? 2. What amount will be reported on the current year's balance sheet for accounts 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 the current year, the unadjusted
1. What amount of bad debt expense should be recorded for the current year?
2. What amount will be reported on the current year's
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