Maple Company provides for doubtful accounts expense at the rate of 3 percent of credit sales. The following data are available for last year: Allowance for Doubtful Accounts, January 1- P54,000 (cr) Accounts written off as uncollectible during the year- P60,000 Collection of accounts written off in prior years (customer credit was re-established)- P15,000 Credit sales, year-ended December 31- P3,000,000 The allowance for doubtful accounts balance at December 31, after adjusting entries, should be A. P99,000. B. P84,000. C. P45,000. D. P90,000.
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.
Maple Company provides for doubtful accounts expense at the rate of 3 percent of credit sales. The following data are available for last year:
- Allowance for Doubtful Accounts, January 1- P54,000 (cr)
- Accounts written off as uncollectible during the year- P60,000
- Collection of accounts written off in prior years (customer credit was re-established)- P15,000
- Credit sales, year-ended December 31- P3,000,000
The allowance for doubtful accounts balance at December 31, after
A. P99,000.
B. P84,000.
C. P45,000.
D. P90,000.
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