Based on aging of the receivables at December 31, 2020, Koko Co. has computed that its collectible trade receivables were P6,500,000. Additional information regarding Koko's trade receivable in 2020 are the following: trade receivables December 31, P700,000; allowance for uncollectible accounts, January 1, P60,000; written off uncollectible accounts P36,000 and recovered uncollectible accounts, P4,000. What is Koko’s provision for bad debts for 2020?
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.
Based on aging of the receivables at December 31, 2020, Koko Co. has computed that its collectible trade receivables were P6,500,000. Additional information regarding Koko's trade receivable in 2020 are the following: trade receivables December 31, P700,000; allowance for uncollectible accounts, January 1, P60,000; written off uncollectible accounts P36,000 and recovered uncollectible accounts, P4,000.
What is Koko’s provision for
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