On December 31, 2020, the accounts receivable control account of nana Company had a balance of P8,200,000. An analysis of the accounts receivable account showed the following: Subscription receivable due in 30 days 2,200,000 Advance payments to creditors on purchase orders 400,000 Advances to affiliated companies 1,000,000 Interest receivable on bonds 400,000 Trade accounts receivable – unassigned 2,000,000 Customers’ accounts reporting credit balances arising from sales returns ( 600,000) Trade accounts receivable – assigned (Finance Company’s equity in assigned accounts is P500,000) 1,500,000 Trade installments receivable due 1-18 months, including unearned finance charge of P50,000 850,000 Trade accounts receivable from officers, due currently 150,000 Trade accounts on which post-dated checks are held (no entries were made on receipt of checks) 200,000 Accounts known to be worthless 100,000 Total 8,200,000 The correct balance of trade accounts receivable on December 31, 2020 is
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.
1. On December 31, 2020, the accounts receivable control account of nana Company had a balance of P8,200,000.
An analysis of the accounts receivable account showed the
following:
Subscription receivable due in 30 days 2,200,000
Advance payments to creditors on purchase orders 400,000
Advances to affiliated companies 1,000,000
Interest receivable on bonds 400,000
Trade accounts receivable – unassigned 2,000,000
Customers’ accounts reporting credit balances arising from sales returns ( 600,000)
Trade accounts receivable – assigned (Finance Company’s equity in
assigned accounts is P500,000) 1,500,000
Trade installments receivable due 1-18 months, including unearned
finance charge of P50,000 850,000
Trade accounts receivable from officers, due currently 150,000
Trade accounts on which post-dated checks are held (no entries were
made on receipt of checks) 200,000
Accounts known to be worthless 100,000
Total 8,200,000
The correct
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