INGAT Company showed the following information related to the accounts receivable in order to estimate bad debts through the use of aging. The credit period of the company is 30 days on the average. Age of Receivables Amount Under 30 days ₱4,000,000 31 to 60 days 1,500,000 61 to 90 days 1,000,000 91 to 120 days 500,000 121 to 150 days 200,000 151 to 180 days 100,000 The company, based on experience, has the following percentage of collectability: Accounts which are overdue for less than 30 days 97% Accounts which are overdue 31 to 60 days 90% Accounts which are overdue 61 to 90 days 75% Accounts which are overdue 91 to 120 days 55% Accounts which are overdue 121 to 150 days 30% Accounts which are overdue for over 150 days 25% What is the carrying value of INGAT’s accounts receivable for balance sheet reporting purposes
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.
INGAT Company showed the following information related to the
Age of Receivables Amount Under 30 days ₱4,000,000
31 to 60 days 1,500,000
61 to 90 days 1,000,000
91 to 120 days 500,000
121 to 150 days 200,000
151 to 180 days 100,000
The company, based on experience, has the following percentage of collectability:
Accounts which are overdue for less than 30 days 97%
Accounts which are overdue 31 to 60 days 90%
Accounts which are overdue 61 to 90 days 75%
Accounts which are overdue 91 to 120 days 55%
Accounts which are overdue 121 to 150 days 30%
Accounts which are overdue for over 150 days 25%
What is the carrying value of INGAT’s accounts receivable for
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