The following information relates to Taylor Ltd: Trade receivables at 1.2.22 Trade receivables at 28.2.22 Trade payables at 1.2.22 Trade payables at 28.2.22 Payments to suppliers in the month Sums received from customers in the month Cash discounts received in the month Cash discounts allowed in the month Bad debt written off in the month Inventory at 1.2.22 Inventory at 28.2.22 101,000 107,000 52,000 49,500 145,100 271,500 1,500 2,700 1,000 85,000 77,000 What is the gross profit of Taylor Ltd for the month of February 2022?
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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