The trial balance before adjustment of Risen Company reports the following balances: DR CR Accounts Receivable $100,000 Allowance for doubtful accounts $3000 Sales all on credit $650,000 Sales returns and allowances $40,000 Prepare the journal entries for the estimated bad debts accounts assuming that uncontrollable accounts are estimated to be 6% of gross accounts receivable and 1% of net sales. Then assume that all the information above is the same, except that the allowance for doubtful accounts has a debi balance of $3000 instead of credit balance.
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
DR CR
Allowance for doubtful accounts $3000
Sales all on credit $650,000
Sales returns and allowances $40,000
Prepare the
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