Presented below is information related to the Accounts receivable accounts of DEF Company. during the current year 2020: a. An aging schedule of the accounts receivable as of December 31,2020 is as follows: Net debit balance P 175,000 % of uncollectibility 1% Age Under 60 days 61-90 days 91-120 days Over 120 days 80,000 42,000 24,000 3% 6% P 4,200 definitely uncollectible remainder estimated 25% uncollectible b. The Accounts Receivable control account has a debit balance of P 321,000 on December 31,2020.
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.
What is the amount of Allowance for uncollectible accounts as of December 31,2019?
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