The following are the selected account balances of ABC Company taken from its trial balance as of December 31, 2020: Accounts Receivable P250,000 Allowance for Doubtful Accounts 25,000 Sales 12,000,000 Sales Returns and Allowances 120,000 Sales Discount 240,000 The bad debt accounts should be 2% of net Accounts Receivable. What is the net realizable value of Accounts Receivable? Select the correct response: P250,000 P245,000 P230,000 P220,500
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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