P9-1B At December 31, 2011, Artie Kendall Imports reported the following information on its balance sheet. Accounts receivable Less: Allowance for doubtful accounts $250,000 15,000 During 2012, the company had the following transactions related to receivables. 1. Sales on account 2. Sales returns and allowances 3. Collections of accounts receivable 4. Write-offs of accounts receivable deemed uncollectible 5. Recovery of bad debts previously written off as uncollectible Instructions (a) Estimate bad debts using income statement approach (b) Esitmate bad debts using blanace sheet approach (b) Compute the accounts receivable turnover ratio for the year 2012. $2,400,000 45,000 2,250,000 12,000 3,000
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.
please answer all parts of the question within 30 minutes.
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