4. On January 1, 2018, Accounts Receivable and Allowance for Uncollectible Accounts for XYZ Company carried balances of $30,000 and $650, respectively. During the year, the company reported $80,000 of credit sales. There were $400 of receivables written off as uncollectible in 2018. Cash collections of receivables amounted to $74,500. The company estimates that it will be unable to collect 6% of the year-end accounts receivable balance. A. The amount of bad debts expense recognized in the 2018 income statement will be: B. The net realizable value of receivables appearing on the 2018 balance sheet will amount to:
4. On January 1, 2018, Accounts Receivable and Allowance for Uncollectible Accounts for XYZ Company carried balances of $30,000 and $650, respectively. During the year, the company reported $80,000 of credit sales. There were $400 of receivables written off as uncollectible in 2018. Cash collections of receivables amounted to $74,500. The company estimates that it will be unable to collect 6% of the year-end accounts receivable balance. A. The amount of bad debts expense recognized in the 2018 income statement will be: B. The net realizable value of receivables appearing on the 2018 balance sheet will amount to:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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4. On January 1, 2018, Accounts Receivable and Allowance for Uncollectible Accounts for XYZ Company carried
balances of $30,000 and $650, respectively. During the year, the company reported $80,000 of credit sales. There were
$400 of receivables written off as uncollectible in 2018. Cash collections of receivables amounted to $74,500. The
company estimates that it will be unable to collect 6% of the year-end accounts receivable balance.
balances of $30,000 and $650, respectively. During the year, the company reported $80,000 of credit sales. There were
$400 of receivables written off as uncollectible in 2018. Cash collections of receivables amounted to $74,500. The
company estimates that it will be unable to collect 6% of the year-end accounts receivable balance.
A. The amount of
B. The net realizable value of receivables appearing on the 2018
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