DEC has the following client account debit balances as of 31/12/2018: Client K 4000€, Client L 9000€, Client M: 6000€ and it is estimated that these claims will not be able to be collected the following amounts from: Client K 400€, Client L: 900€, and Client M: 800€. On 30/3/2019 received from Client K 3000€, Client L 7 000€, Client M: 5000€. On 31/12/2020 because clients L and M went bankrupt it was estimated that no part of the receivables can be collected. On 01.05.2022, € 600 was collected from the bankruptcy estate of client L. It is requested to make the relevant calendar entries of the above accounting events for each of the cases.
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.
2.
DEC has the following client account debit balances as of 31/12/2018: Client K 4000€, Client L 9000€, Client M: 6000€ and it is estimated that these claims will not be able to be collected the following amounts from: Client K 400€, Client L: 900€, and Client M: 800€. On 30/3/2019 received from Client K 3000€, Client L 7 000€, Client M: 5000€. On 31/12/2020 because clients L and M went bankrupt it was estimated that no part of the receivables can be collected. On 01.05.2022, € 600 was collected from the bankruptcy estate of client L.
It is requested to make the relevant calendar entries of the above accounting events for each of the cases.
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