Based on the following information: Credit sales $172,000 Collections on accounts receivable during the year 170,000 Cash sales 810,000 Unadjusted debit balance in Allowance for Doubtful Accounts 40 Sales returns and allowances for credit sales 2,000 Accounts receivable, beginning of the year 14,000 If expected bad debts are estimated to be 1 1/2% of ending accounts receivable, the adjusting entry to recognize bad debts will include a debit to Bad Debt Expense for $190 $210 $250 $170
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.
| Credit sales | $172,000 |
| Collections on accounts receivable during the year | 170,000 |
| Cash sales | 810,000 |
| Unadjusted debit balance in Allowance for Doubtful Accounts | 40 |
| Sales returns and allowances for credit sales | 2,000 |
| Accounts receivable, beginning of the year | 14,000 |
If expected
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