The following transactions affecting the accounts receivable of FST Inc. took place during the year ended December 31: Sales (Cash & Credit) 5,900,000 Cash received from credit customers, all of whom took advantage of the discount feature of the entity’s credit term 4/10, n/30 3,024,000 Cash received from cash customers 2,100,000 Accounts receivable written off as worthless 50,000 Credit memorandum issued to credit customers for sales return and allowances 250,000 Cash refund given to cash customers for sales return and allowances 20,000 Recoveries on account receivable written off as uncollectible in prior periods (not included in cash amount stated above) 80,000 The following balances were taken from the January 1 Statement of Financial Position: Accounts Receivable 950,000
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.
The following transactions affecting the
|
Sales (Cash & Credit) |
5,900,000 |
|
Cash received from credit customers, all of whom took advantage of the discount feature of the entity’s credit term 4/10, n/30 |
3,024,000 |
|
Cash received from cash customers |
2,100,000 |
|
Accounts receivable written off as worthless |
50,000 |
|
Credit memorandum issued to credit customers for sales return and allowances |
250,000 |
|
Cash refund given to cash customers for sales return and allowances |
20,000 |
|
Recoveries on account receivable written off as uncollectible in prior periods (not included in cash amount stated above) |
80,000 |
The following balances were taken from the January 1
|
Accounts Receivable |
950,000 |
|
Allowance for Doubtful account |
100,000 |
The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the amount of P70,000 for the current year.
What is the balance of Accounts Receivable on December 31?
a. 1,220,000
b. 1,280,000
c. 1,300,000
d. 1,426,000
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