E. Karen Company reported accounts receivable 8,000,000 on December 31, 2017 and allowance for doubtful accounts 1,000,000 on January 1,2017. During the year, accounts of 400,000 were written off and recoveries of accounts written off totalled 100,000. Under 30 days 31-180 days Amount More than 1 yr 5,000,000 1,500,000 181-360 days 1,000,000 500,000 % Collectible 90% 80% 50% 2%
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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