Selected accounts from Bennett Co.’s adjusted trial balance for the year ended December 31 follow. Prepare a classified balance sheet. Note: Allowance for doubtful accounts is subtracted from accounts receivable on the company’s balance sheet. Prepaid rent . $ 1,000 Accounts payable. $2,500 Accounts receivable. 10,000 Allowance for doubtful accounts. 500 Cash . 12,000 Notes payable (due in 10 years). 6,000 Total equity. 18,000 Notes receivable (due in 4 years) . 4,000
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.
Selected accounts from Bennett Co.’s adjusted
Prepare a classified
on the company’s balance sheet. Prepaid rent . $ 1,000 Accounts payable. $2,500
Accounts receivable. 10,000 Allowance for doubtful accounts. 500
Cash . 12,000 Notes payable (due in 10 years). 6,000
Total equity. 18,000 Notes receivable (due in 4 years) . 4,000
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