Sky Company provided the following information at year-end: 2020 2019 Accounts receivable Allowance for doubtful accounts Allowance for sales returns 880,000 ( 10,000) ( 20,000) 800,000 ( 15,000) ( 25,000) Net realizable value 850,000 760,000 The entity reported doubtful accounts expense in 2020 of P30,000 and had products returned for credits totaling P15,000 at sale price. Gross sales for 2020 amounted to P6, 150,000. 4. What amount was reported as net sales for 2020? a. 6,150,000 b. 6,140,000 c. 6,100,000 d. 6,135,000
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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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