On January 1, 2022, Willett Company's account balances for Accounts Receivable and the related Allowance for doubtful accounts were 3,600,000 and 90,000, respectively. During the year sales revenue totaled 40 million, of which 70% were credit sales and the remainder were cash sales. Altogether, cash collections from all customers amounted to 30 million. also, write-offs of accounts deemed to be uncollectible totaled 250,000. at the end of the year, an analysis of aged accounts receivable indicated that 2% of total gross receivables may be uncollectible. Determine the amount of bad debt expense for the year and net realizable value of receivables at the end of the year
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.
On January 1, 2022, Willett Company's account balances for
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