In 2021 Waterway Co. had credit sales of $1890000 and sales returns and allowances related to these sales of $152000. Its comparative balance sheet at December 31, 2021 showed the following: 2021 2020 Accounts receivable $827000 $671000 Less: Allowance for doubtful accounts 70000 70000 Carrying amount $757000 $601000 The company's average collection period for 2021 is (Round answers to 0 decimal places. Use 365 days for the calculation purpose.) O 130 days. O 143 days. O 145 days. O 157 days.
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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