Sunland Inc. shows a balance of $511,000 in the Accounts Receivable account on December 31, 2023. The balance consists of th following: installment accounts due in 2024 installment accounts due after 2024 Overpayments to creditors Due from regular customers, of which $40,000 represents accounts pledged as security for a bank loan Advances to employees Advance to subsidiary company (made in 2018) $92,500 72,000 12,620 161,000 69,880 103,000 $511.000
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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