Based on the information: Credit sales - P 172,000 credit Collections on accounts receivable during the year - P170,000 credit Cash sales - 810,000 credit Unadjusted balance in Allowance for doubtful accounts - 50 debit Sales returns and allowances for credit sales - 4,000 debit Accounts receivable, beginning of the year - 14,000 debit If bad debts are estimated to be 1 1/2% of ending accounts receivable, in the adjusting entry to recognize bad debts, you would debit bad debt expense for: a. P 230 b. P 180 c. P 130 d. P 190
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 the information:
Credit sales - P 172,000 credit
Collections on
Cash sales - 810,000 credit
Unadjusted balance in Allowance for doubtful accounts - 50 debit
Sales returns and allowances for credit sales - 4,000 debit
Accounts receivable, beginning of the year - 14,000 debit
If
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