Penn Co.'s allowance for uncollectible accounts was $200,000 at the end of 2019 and $180,000 at the end of 2018. For the year ended December 31, 2019, Penn reported bad debt expense of $40,000 in its income statement. What amount did Penn debit to the appropriate account in 2019 to write off actual bad debts?
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.
Penn Co.'s allowance for uncollectible accounts was $200,000 at the end of 2019 and $180,000 at the end of 2018. For the year ended December 31, 2019, Penn reported bad debt expense of $40,000 in its income statement. What amount did Penn debit to the appropriate account in 2019 to write off actual
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