Soap Co. has the following information on December 31, 20x1 before any year-end adjustments. Allowance for doubtful accounts, Jan. 1 30,400 Write-offs 19,000 Recoveries 3,800 Sales (including cash sales of ₱380,000) 2,280,000 Sales returns and discounts (including ₱3,800 sales returns on cash sales) 22,800 Accounts receivable, Dec. 31 570,000 Percentage of credit sales 3% How much is the recoverable historical cost of accounts receivable? a. 498,370 b. 502,630 c. 486,780 d. 478,970
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.
Soap Co. has the following information on December 31, 20x1 before any year-end adjustments.
Allowance for doubtful accounts, Jan. 1 30,400
Write-offs 19,000
Recoveries 3,800
Sales (including cash sales of ₱380,000) 2,280,000
Sales returns and discounts (including ₱3,800 sales
returns on cash sales) 22,800
Percentage of credit sales 3%
How much is the recoverable historical cost of accounts receivable?
a. 498,370
b. 502,630
c. 486,780
d. 478,970
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