Pachel Corporation reports the following information pertaining to its accounts receivable: Days Past Due Current 1–30 31–60 61–90 Over 90 $ 60,000 $ 40,000 $ 25,000 $ 12,000 $ 2,000 The company's credit department provided the following estimates regarding the percent of accounts expected to eventually be written off from each category listed above: Current receivables outstanding 2 % Receivables 1–30 days past due 4 Receivables 31–60 days past due 16 Receivables 61–90 days past due 40 Receivables over 90 days past due 90
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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Pachel Corporation reports the following information pertaining to its |
| Days Past Due | ||||
| Current | 1–30 | 31–60 | 61–90 | Over 90 |
| $ 60,000 | $ 40,000 | $ 25,000 | $ 12,000 | $ 2,000 |
|
The company's credit department provided the following estimates regarding the percent of accounts expected to eventually be written off from each category listed above: |
| Current receivables outstanding | 2 | % |
| Receivables 1–30 days past due | 4 | |
| Receivables 31–60 days past due | 16 | |
| Receivables 61–90 days past due | 40 | |
| Receivables over 90 days past due | 90 | |
| The company uses a |
| a. |
Record the company's impairment loss of receivable, assuming it has a $1,400 credit balance in its Allowance for Impairment prior to making the necessary adjustment. (Omit the "$" sign in your response.) |
| General Journal | Debit | Credit |
| (Click to select)Impairment loss of receivableAccounts receivableMarketable securitiesAllowance for ImpairmentLoss on sale of investmentsCashGain on sale of investmentsAccounts payable | ||
| (Click to select)Marketable securitiesCashGain on sale of investmentsImpairment loss of receivableAccounts receivableLoss on sale of investmentsAccounts payableAllowance for Impairment | ||
| b. |
Record the company's impairment loss of receivable, assuming it has a $1,600 debit balance in its Allowance for Impairment prior to making the necessary adjustment. (Omit the "$" sign in your response.) |
| General Journal | Debit | Credit |
| (Click to select)Accounts receivableImpairment loss of receivableMarketable securitiesGain on sale of investmentsAllowance for ImpairmentCashLoss on sale of investmentsAccounts payable | ||
| (Click to select)Accounts payableGain on sale of investmentsMarketable securitiesAccounts receivableCashAllowance for ImpairmentImpairment loss of receivableLoss on sale of investments | ||
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