The following information is also available: Beginning balance of Accounts Receivable P 500,000 Net credit sales for the year P 4,000,000 Collections on credit sales 3,000,000 Allowance for doubtful accounts. January 1 = 5,000 (cr) Allowance for doubtful accounts, December 31, (before adjustments) 2,000 (dr) Required: Determine the Doubtful Accounts Expense and Allowance for doubtful accounts reported in the company's financial statements for 2019 assuming the company uses the following: Allowance for Doubtful Accounts Method Doubtful Accounts balance, end Expense Aging of AR 1) 2) 5% of Outstanding AR 3) 4) 3% of Net Credit Sales 5) 6)
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.
Step by step
Solved in 3 steps