Reginald Company, which began operations on January 5, 20x1, appropriately uses the install method of revenue recognition. The following information pertains to the operations for 20x1 and 20x2: 20x1 20x2 Sales P600,000 P900,000 Collections from: 20x1 sales 200,000 100,000 20x2 sales 300,000 Accounts written off from: 20x1 sales 50,000 150,000 20x2 sales 300,000 Gross profit rates 30% 40% REQUIRED: 2. Deferred gross profit on December 31, 20x2 ______________ 3. Realized gross profit in 20x2 ______________
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.
Reginald Company, which began operations on January 5, 20x1, appropriately uses the install method of
revenue recognition. The following information pertains to the operations for 20x1 and 20x2:
20x1 20x2
Sales P600,000 P900,000
Collections from:
20x1 sales 200,000 100,000
20x2 sales 300,000
Accounts written off from:
20x1 sales 50,000 150,000
20x2 sales 300,000
Gross profit rates 30% 40%
REQUIRED:
2. Deferred gross profit on December 31, 20x2 ______________
3. Realized gross profit in 20x2 ______________
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
