Selected accounts from Bennett Co.'s adjusted trial balance for the year ended December 31 follow. Prepaid rent Accounts receivable Cash Total equity Current assets Prepare a classified balance sheet. Note: Allowance for doubtful accounts is subtracted from accounts receivable on the company's balance sheet. BENNETT CO. Balance Sheet December 31 Assets Total current assets Long-term investments Total assets $ 1,000 10,000 12,000 18,000 Accounts payable Allowance for doubtful accounts Notes payable (due in 10 years) Notes receivable (due in 4 years) $ $ 2,500 500 6,000 4,000 0
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.
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