The unadjusted net accounts receivable on the books of Elantra Ltd. as of 31 December 20X4 are as follows: Accounts receivable Less: Allowance for doubtful accounts $250,000 40,000 $210,000 40% of the accounts are current and 5% might not be collected, and the remainder is past due and 30% might not be collected. Required: Calculate the bad debt expense, the balance in the allowance for doubtful accounts, and the net accounts receivable on the SFP at the end of 20X4.
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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