Pharoah Co. manufactures and sells plumbing fixtures for homes & businesses. All its sales are made on credit to wholesale distributors. Information for Pharoah Co. for the current year is as follows: Total credit sales Accounts receivable at December 31 (a) Assume that Pharoah Co. estimates its credit losses based on an aging analysis of its year-end accounts receivable, which indicates that a provision for uncollectible accounts of $40,000 is required: If there is a debit balance of $5,700 in its allowance for expected credit losses on December 31, before adjustment, i. What amount will the company report on its income statement as credit losses? Credit losses S $970,000 $460,000 ii. What amount will it report on its balance sheet as the carrying amount of its accounts receivable? Net accounts receivable S
Pharoah Co. manufactures and sells plumbing fixtures for homes & businesses. All its sales are made on credit to wholesale distributors. Information for Pharoah Co. for the current year is as follows: Total credit sales Accounts receivable at December 31 (a) Assume that Pharoah Co. estimates its credit losses based on an aging analysis of its year-end accounts receivable, which indicates that a provision for uncollectible accounts of $40,000 is required: If there is a debit balance of $5,700 in its allowance for expected credit losses on December 31, before adjustment, i. What amount will the company report on its income statement as credit losses? Credit losses S $970,000 $460,000 ii. What amount will it report on its balance sheet as the carrying amount of its accounts receivable? Net accounts receivable S
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Pharoah Co. manufactures and sells plumbing fixtures for homes & businesses. All its sales are made on credit to wholesale
distributors.
Information for Pharoah Co. for the current year is as follows:
Total credit sales
Accounts receivable at December 31
(a)
Assume that Pharoah Co. estimates its credit losses based on an aging analysis of its year-end accounts receivable, which
indicates that a provision for uncollectible accounts of $40,000 is required:
If there is a debit balance of $5,700 in its allowance for expected credit losses on December 31, before adjustment,
i. What amount will the company report on its income statement as credit losses?
Credit losses
S
$970,000
$460,000
ii. What amount will it report on its balance sheet as the carrying amount of its accounts receivable?
Net accounts receivable S
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