Sasha Novikov had P7,250,000 for his beginning balance of accounts receivable for 2022. It is the company's policy to record bad debts at 5% up until the end of 2021. However, moving forward, the company moved to an aging policy based on the following table: Days outstanding Uncollectability rate 2% 30-60 days 61-120 days 3% >120 days 7.5% Sasha collected 85% from the previous year's accounts receivable. Sasha collected P4,856,250 in relation to the services rendered for the current year. Said amount was also 92.5% of total services rendered for the year. Of the total accounts receivable at year-end, 22.5% were outstanding for less than a month, 20% were outstanding for 1 month, 5% were outstanding for 2 months, another 5% were outstanding for 3 months, 15% were outstanding for 4 months, 5% were
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.
9. How much was Sasha Novikov’s adjusted
- 1,481,250
10. How much was the adjusted balance of Sasha Novikov’s allowance for
- 95,491
How much was the adjustment to bad debts expense? (Indicate before the answer if debit or credit: Eg. “Debit 50,000” or “Credit 50,000”)
- Credit 267,009
How much was the unadjusted balance of allowance for bad debts?
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 2 images
