The following accounts were abstracted from the December 31, 2019 trial balance of R Company: Debit Credit Credit sales P750,000 Sales discounts P15,000 On January 1, 2019, allowance for doubtful accounts had a credit balance of P18,000. During 2019, P30,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of gross sales prove to be uncollectible. What should be the allowance for doubtful accounts at December 31, 2019 after provision is made for the current year? a. P10,050 b. P10,500 c. P22,050 d. P34,500
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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