Instruction: From the following partial worksheet of Atty. Villanueva for six-month period ended December 31, 2019, prepare the financial statement in good form. Trial Balance Debit Credit Income Statement Credit Debit Balance Sheet Debit Credit Cash on Hand 40,000 50,000 30,000 40,000 50,000 30,000 10,000 20,000 15,000 Cash in Bank Accounts Receivable Note Receivable Prepaid Insurance Office Furniture Accounts Payable Notes Payable М. Сapital M. Drawing Service Income Salaries Expense Supplies Expense Taxes and Licenses Rent Expense Interest Expense 10,000 20,000 15,000 20,000 10,000 77,000 20,000 10,000 77,000 5,000 5,000 150,000 150,000 36,000 8,000 5,000 24,000 2,000 3,000 36,000 8,000 5,000 24,000 2,000 3,000 Bad Debts Allowance for Bad Debts 3,000 3,000 Depreciation Expense Accumulated Depreciation - Furniture Insurance Expense Unused Supplies Interest Income 1,500 1,500 1,500 1,500 10,000 10,000 3,000 3,000 1,000 262,500 262,500 89,500 151,000 173,000 111,500 Net Income 61,500 151,000 151,000 173,000 173,000 61,500 Total
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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