On January 1, Dillon Company had a $3,100 credit balancein the Allowance for Doubtful Accounts. During the year,sales totaled $780,000, and $6,900 of accounts receivablewere written off as uncollectible. A December 31 aging of accounts receivable indicated the amount probably uncol-lectible to be $5,300. (No recoveries of accounts previously written off were made during the year.) Dillon’s financialstatements for the current year should include:a. Uncollectible accounts expense of $9,100.b. Uncollectible accounts expense of $5,300.c. Allowance for Doubtful Accounts with a credit balanceof $1,500.d. Allowance for Doubtful Accounts with a credit balanceof $8,400.
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, Dillon Company had a $3,100 credit balance
in the Allowance for Doubtful Accounts. During the year,
sales totaled $780,000, and $6,900 of
were written off as uncollectible. A December 31 aging of
accounts receivable indicated the amount probably uncol-
lectible to be $5,300. (No recoveries of accounts previously
written off were made during the year.) Dillon’s financial
statements for the current year should include:
a. Uncollectible accounts expense of $9,100.
b. Uncollectible accounts expense of $5,300.
c. Allowance for Doubtful Accounts with a credit balance
of $1,500.
d. Allowance for Doubtful Accounts with a credit balance
of $8,400.
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