Credible Company provided the following T-account summarizing the transactions affecting the accounts receivable for the current year: Accounts Receivable 600,000 Collections from customers 5,300,000 6,000,000 Writeoff Jan. 1 balance Charge sales Shareholders' subscriptions Deposit on contract Claims agàinst common carrier for damages IOUS from employees 35,000 Merchandise returns 200,000 Allowances to customer for shipping damages 40,000 120,000 25,000 40,000 Collections on carrier claims 100,000 Collection on subscriptions 50,000 10,000 Cash advance to affiliates 100,000 Advances to a supplier 50,000 Required: a. Compute the correct amount of accounts receivable. b. Prepare one compound entry to adjust the accounts receivable. c. Compute the amount to be presented as "trade and other receivables" under current assets. d. Indicate the classification and presentation of the other items.
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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Credible Company provided the following T-account
summarizing the transactions affecting the accounts receivable
for the current year:
Accounts Receivable
600,000 Collections from customers 5,300,000
6,000,000 Writeoff
Jan. 1 balance
Charge sales
Shareholders'
- subscriptions
Deposit on contract
Claims against common
carrier for damages
IOUS from employees
Cash advance to affiliates 100,000
Advances to a supplier
35,000
Merchandise returns
40,000
200,000| Allowances to customer
for shipping damages
120,000
25,000
Collections on carrier claims
40,000
100,000 Collection on subscriptions
50,000
10,000
50,000
Required:
a. Compute the correct amount of accounts receivable.
b. Prepare one compound entry to adjust the accounts receivable.
c. Compute the amount to be presented as "trade and other
receivables" under current assets.
d. Indicate the classification and presentation of the other items."
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