ts receivable 1,000,000 Allowance for Bad Debts 10,000 Sales 5,000,000 Sales Discount 3,000 Sales Returns and Allowances 30,000 The company estimates that 10% of Accounts Receivable is doubtful of collection. Cash sales amounted to 2,000,000 Answer the following questions: 1) Adjusting entries on December 31 2) Balances of Bad Debt Exp
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.
An excerpt from the
Allowance for
Sales 5,000,000
Sales Discount 3,000
Sales Returns and Allowances 30,000
The company estimates that 10% of Accounts Receivable is doubtful of collection.
Cash sales amounted to 2,000,000
Answer the following questions:
1)
2) Balances of Bad Debt Expense as of December 31
3) Should the adjustment was not made, what would be the effect on owner's equity?
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