TB MC Qu. 5-133 (Algo) On December 31, 2024, a company... On December 31, 2024, a company had balances in Accounts Receivable and Allowance for Uncollectible Accounts of $46,000 and $2,150, respectively. During 2025, the company wrote off $600 in accounts receivable and determined that there should be an allowance for uncollectible accounts of $5,100 at December 31, 2025. Bad debt expense for 2025 would be: Multiple Choice $3,050. $600. $7,850. $3,550.
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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