Solar Company has gathered the following information about the company's accounts receivable and credit losses during the current year Net credit sales for the year Accounts receivable at year-end Uncollectible accounts receivable: Actually written off during the year Estimated portion of year-end receivables expected to prove uncollectible (per aging schedule) $136,000 72,000 Multiple Choice The company uses the direct write-off method of accounting for uncollectible accounts. The correct journal entry using the direct write-off method th year is: dr. Allowance for doubtful accounts 72,000 cr. Accounts receivable $6,000,000 1,250,000 dr. Uncollectible accounts expense 208,000 cr. Allowance for doubtful accounts 208,000 72.000 dr. Allowance for doubtful accounts 120,000 208,000

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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.