Notes: The following have not yet been recorded in the trial balance accounts: i) Patronic Manufacturing provides for depreciation on equipment at 20% on a reducing balance basis. This should be recorded in production expenses. ii) Depreciation on motor vehicles is charged at 20% on a straight-line basis. This should be recorded in distribution expenses. iii) The directors have decided that the doubtful debt provision should be set at 4% of the value of the trade receivables at the year end. iv) Accounting fees relating to the year ended 31 December 2022 are estimated at £8,000. No bill has yet been received. Accountancy costs should be recorded in administration expenses. v) Inventory at 31 December 2022 is valued at £130,240.
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.
Notes: The following have not yet been recorded in the
i) Patronic Manufacturing provides for
ii) Depreciation on motor vehicles is charged at 20% on a straight-line basis. This should be recorded in distribution expenses.
iii) The directors have decided that the doubtful debt provision should be set at 4% of the value of the trade receivables at the year end.
iv) Accounting fees relating to the year ended 31 December 2022 are estimated at £8,000. No bill has yet been received. Accountancy costs should be recorded in administration expenses.
v) Inventory at 31 December 2022 is valued at £130,240.
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