Noreen Company provided the following information for 2020: Accounts receivable – January 1 2,000,000 Credit sales 10,000,000 Collection from customers, excluding the recovery of accounts written off 8,000,000 Accounts written off 100,000 Sales returns 500,000 Recovery of accounts written off 50,000 Estimated future sales returns on December 31 150,000 Estimated uncollectible accounts on December 31 per aging 300,000 What is the “amortized cost” of accounts receivable on December 31, 2020? A. 3,400,000 B. 3,100,000 C. 2,950,000 D. 2,900,000
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.
Noreen Company provided the following information for 2020:
Credit sales 10,000,000
Collection from customers, excluding the recovery of accounts written off 8,000,000
Accounts written off 100,000
Sales returns 500,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 150,000
Estimated uncollectible accounts on December 31 per aging 300,000
What is the “amortized cost” of accounts receivable on December 31, 2020?
A. 3,400,000 B. 3,100,000 C. 2,950,000 D. 2,900,000
Step by step
Solved in 2 steps with 1 images
