The Net Profit Before Tax is $1,500,000. You receive the following notes: Professional fees include legal fees of $40,000 incurred in defending a legal action brought against the company by an irate employee for wrongful dismissal. Bad debt expenses of $42,000 include $12,000 of this amount is owed by a corporate customer who has gone out of business. The balance is a general provision for doubtful debts based on estimates. Donations include an amount of $10,000 for political donations. Capital Allowances was $250,000. You have calculated the adjusted profit to be: a. $1,250,000 b. $1,330,000 c. $1,512,000 d. $1,280,000
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 Net Profit Before Tax is $1,500,000. You receive the following notes:
Professional fees include legal fees of $40,000 incurred in defending a legal action brought against the company by an irate employee for wrongful dismissal.
Donations include an amount of $10,000 for political donations.
Capital Allowances was $250,000.
You have calculated the adjusted profit to be:
a.
$1,250,000
b.
$1,330,000
c.
$1,512,000
d.
$1,280,000
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