Millennium Associates records bad debt using the allowance, balance sheet method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On November 22, Millennium Associates identifies one uncollectible account from Angel’s Hardware in the amount of $3,650. On December 18, Angel’s Hardware unexpectedly pays its account in full. Record journal entries for the following. Year-end adjusting entry for 2017 bad debt November 22, 2018 identification entry Entry for payment on December 18, 2018
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.
Millennium Associates records
- Year-end
adjusting entry for 2017 bad debt - November 22, 2018 identification entry
- Entry for payment on December 18, 2018
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