Monkey, Inc. had a $420,000 beginning balance in Accounts Receivable and a $15,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $2,400,000 and customers' accounts collected were $2,430,000. Also, $12,000 in worthless accounts were written off. An aging of the accounts indicates that 5% of the end-of-the-year Accounts Receivable balance is doubtful for collection. What amount of Bad Debts Expense should be provided at year-end? Select one: A $21,900 OB. $22.800 OC. $15,900 D. $18,900
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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