Hopefully this is the last one, can you show me this one too? 3. The data presented below are for XYZ Corporation for the year ended December 31, 2018: Credit Sales $1,800,000 Accounts Receivable (12/31/18) 210,000 Sales returns 90,000 Estimated amount of uncollectible accounts based on an aging analysis 22,000 Allowance for doubtful accounts (before adjustment at December 31, 2018) 2,000 A. If bad debts are estimated at 3% of net credit sales, what amount will be reported as bad debts expense for 2018? B. If bad debts are estimated at 3% of net credit sales, what will be the balance in the Allowance for Doubtful Accounts account after the adjustment for bad debts?
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.
Hopefully this is the last one, can you show me this one too?
Credit Sales $1,800,000
Sales returns 90,000
Estimated amount of uncollectible accounts based on an aging analysis 22,000
Allowance for doubtful accounts (before adjustment at December 31, 2018) 2,000
A. If
B. If bad debts are estimated at 3% of net credit sales, what will be the balance in the Allowance for Doubtful
Accounts account after the adjustment for bad debts?
Step by step
Solved in 3 steps
