The following Trial Balance was extracted from the books of EMGEE Sdn Bhd, an accounting firm as at 31 December 2021: Service Revenue Utilities Office Equipment Salaries Insurance Rental Lorry Bank Loan Interest on loan Account Payables Cash at bank Drawings Capital Total Debit (RM) 4,500 55,800 22,500 5,500 10,500 80,800 5,000 15,200 10,000 209,800 Credit (RM) 113,000 25,000 30,000 41,800 209,800 You are required to: (a) Prepare Income statement for the year ended 31 December 2021. (b) Prepare a classified balance sheet as at 31 December 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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