At what amount will the accounts receivable be shown in the statement of financial position?
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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.
The following data were taken from the records of Marlyn Company for the year ended December 31, 2010.
Sales on account 1,800,000
Notes received to settle accounts 200,000
Provision for doubtful accounts 45,000
Accounts receivable determined to be worthless 10,000
Merchandise returned by customer 7,500
Collections received to settle accounts 1,225,000
Discounts permitted to be taken by customers 22,500
Collections received in settlement of notes 75,000
At what amount will the accounts receivable be shown in the
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