Harlan Company uses the Allowance method for accounting for receivables. They had the following information as of December 31, 2022: Net Credit Sales, year 2022 6,867,750 Accounts Receivable, December 31, 2021 655,000 Accounts Receivable, December 31, 2022 745,000 Allowance for Doubtful Accounts, December 31, 2022 4,350 Credit Harlan Company estimates that 2% of the Accounts Receivable will become uncollectible. What are some things that a company can do to improve the collection of its Accounts Receivable? On January 7, 2023 it was determined that Bundy Company’s account in the amount of $3,800 will be uncollectible. Prepare the entry to write off the Bundy Company account. What is the Cash Realizable Value of the receivables after the write-off of the Bundy Company account?
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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.
Harlan Company uses the Allowance method for accounting for receivables. They had the following information as of December 31, 2022:
|
Net Credit Sales, year 2022 |
6,867,750 |
|||
|
|
655,000 |
|||
|
Accounts Receivable, December 31, 2022 |
745,000 |
|||
|
Allowance for Doubtful Accounts, December 31, 2022 |
4,350 |
Credit |
Harlan Company estimates that 2% of the Accounts Receivable will become uncollectible.
What are some things that a company can do to improve the collection of its Accounts Receivable?
On January 7, 2023 it was determined that Bundy Company’s account in the amount of $3,800 will be uncollectible. Prepare the entry to write off the Bundy Company account.
What is the Cash Realizable Value of the receivables after the write-off of the Bundy Company account?
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