Clearwater Co. reported sales revenue of $4,625 in its income statement for the year ended December 31, 2019. The Accounts Receivable account decreased from $1,200 to $1,000 during 2019 The Allowance for Uncollectible Accounts decreased by $100 during 2019. Cash collected from customers was $4.500 Clearwater Co. uses the allowance method for recording bad debts write offs and year end estimates are properly recorded. Bad Debt Expense for 2019 was Select one O $225 Ob 125 O $175 Od $125 O $275
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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