Sankara Auto Sales has an accounts receivable balance after posting collections from customers for 2020 of $180,000. Sankara's customers took advantage of sales discounts of $15,000 for the period. Management performed an aging of the accounts receivable and estimated loss percentages as follows: $90,000 Current at 2%, $50,000 1-30 days past due 5%, $30,000 31-60 days past due 10%, $10,000 60 plus days past due 25%. The amount of accounts receivable expected to be collected is: A. $173,200 B. $172,700 C. $180,000 D. $170,200
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.
Sankara Auto Sales has an
- A. $173,200
- B. $172,700
- C. $180,000
- D. $170,200
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