The following transactions (in summary) affecting the accounts receivable of Seraphine company occurred during the year ended December 31, 2021: Accounts Receivable balance, January 1 674,000 Allowance for bad debt balance, January 1 (credit balance) 24,000 Sales (all on account, terms: 2/10, 1/15, n/60) 3,000,000 Cash received includes the following: 3,200,000 The cash received includes the following: Customers paying within the 10-day discount period 1,764,000 Customers paying within the 15-day discount period 990,000 Recovery of accounts written-off 6,000 Customers paying beyond the discount period Accounts Receivable written-off as worthless 22,000 Credit memo for sales return 12,000 It is the company's policy to provide for uncollectible accounts equal to 1% of sales. How much is the carrying amount of the accounts receivable as of December 31, 2021?
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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