Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12, the company receives a $540 check from Chad Thomas in settlement of Thomas's $1,080 outstanding accounts receivable. Due to Thomas's failing health, he is closing his company and is expecting to make no further payments to Discount Mart. Journalize this transaction.
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.
Discount Mart utilizes the allowance method of accounting for uncollectible receivables. On December 12, the company receives a $540 check from Chad Thomas in settlement of Thomas's $1,080 outstanding
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
