Cheyenne Corp. had net sales in 2020 of $2.0 million. At December 31, 2020, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable $237,600 debit; Allowance for Doubtful Accounts $3,500 debit. Assume Cheyenne has examined the aging of the accounts receivable and has determined the Allowance for Doubtful Accounts should have a balance of $25,800, prepare the December 31, 2020 journal entry to record the adjustment to Allowance for Doubtful Accounts.
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.
3. Cheyenne Corp. had net sales in 2020 of $2.0 million. At December 31, 2020, before
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Account Titles and Explanation
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Debit
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Credit
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enter an account title
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enter a debit amount
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enter a credit amount
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enter an account title
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enter a debit amount
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enter a credit amount
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