O Calculate the amount required in the allowance for doubtful debts as on 31st December 2021, using accounts receivable method. Prepare journal entries for bad and doubtful debts, show the account receivable would be presented on the financial statement position.. Explain how the company can control the aged debts and the measures to collect them early (minimum 200 words).
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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