Godzilla Corp. has the following account balances on December 31st: Sales revenues (100% on credit) $3,450,000 Sales discounts $44,000 Sales returns and allowances 110,000 Accounts Receivable 300,000 Allowance for Doubtful Accounts (credit balance before adjustment) 5,000 Godzilla estimates that their bad debt expense will be 2% of net credit sales. What is the ending balance in Allowance for Doubtful Accounts?
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.
Godzilla Corp. has the following account balances on December 31st:
Sales revenues (100% on credit) $3,450,000
Sales discounts $44,000
Sales returns and allowances 110,000
Allowance for Doubtful Accounts (credit balance before adjustment) 5,000
Godzilla estimates that their
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