Hitachi, Ltd., reports total revenues of ¥10,034,305 million for its current fiscal year, and its current fiscal year-end unadjusted trial balance reports a debit balance for trade receivables (gross) of ¥2,992,770 million. a. Prepare the adjusting entry to record its bad debts expense assuming uncollectibles are estimated to be 0.4% of total revenues and its unadjusted trial balance reports a credit balance of ¥10,000 million for the Allowance for Doubtful Accounts. b. Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be 2.0% of year-end trade receivables (gross) and its unadjusted trial balance reports a credit balance of ¥10,000 million for the 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.
Hitachi, Ltd., reports total revenues of ¥10,034,305 million for its current fiscal year, and its current
fiscal year-end unadjusted
¥2,992,770 million.
a. Prepare the
0.4% of total revenues and its unadjusted trial balance reports a credit balance of ¥10,000 million for
the Allowance for Doubtful Accounts.
b. Prepare the adjusting entry to record bad debts expense assuming uncollectibles are estimated to be
2.0% of year-end trade receivables (gross) and its unadjusted trial balance reports a credit balance of
¥10,000 million for the Allowance for Doubtful Accounts.
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