Spooky Company's sales, current assets and current liabilities (all in thousands of pesos) have been reported as follows over the last five years (Year 5 is the most recent year): Year 5 Year 4 Year 3 Year 2 Year I Sales. P5,625 P5,400 P4.950 P4,725 P4,500 ....... Current assets: Cash .. Accounts receivable.. Inventory. P 64 560 896 P 72 P 84 496 880 P 88 P 80 432 816 416 400 864 800 Total current assets...... PL520 PL448 P1.332 PL368 P1.280 Currerit liabilities. .. P390 P 318 P 324 P_330 P 300
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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