The Peter Company's Unadjusted Trial Balance shows the following balances: Accounts Receivable ....................................................... $600,000. (dr.) Allowance for Uncollectible Accounts ...............................$13,000. (dr.) Net Sales ...................................................................... $4,000,000. (cr.) 4.Assume that Peter Company’s aging schedule indicates that 4% of the December 31 receivables will become uncollectible. What amount of bad debt expense will Peter Company report in its income statement? a.$ 9,000. b.$13,000. c.$24,000. d.$37,000. 5.Assume that Peter Company estimates its bad debts expense to be 1% of Net Sales. After the adjustment is made to record bad debts expense, what will be the net carrying value of the accounts receivable in Peter Company's Balance Sheet? a.$600,000. b.$573,000. c.$560,000. d.$547,000.
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 Peter Company's Unadjusted
Allowance for Uncollectible Accounts ...............................$13,000. (dr.)
Net Sales ...................................................................... $4,000,000. (cr.)
4.Assume that Peter Company’s aging schedule indicates that 4% of the December 31 receivables will become uncollectible. What amount of bad debt expense will Peter Company report in its income statement?
a.$ 9,000.
b.$13,000.
c.$24,000.
d.$37,000.
5.Assume that Peter Company estimates its
a.$600,000.
b.$573,000.
c.$560,000.
d.$547,000.
Step by step
Solved in 2 steps
