Using the Allowance method supply the journal entries to bring back the written off Account Receivable and the payment for it.
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.
Using the Allowance method supply the
Write- off Method
cash 15,000
less: allowance for doubtful accounts 6,000 36,000
inventory 15,000
total current assets 66,000
before write off after Write off
Accounts receivable 50,000 49,000
allowance for DA 3,000 2,0000
cash Realizable value 47,000 47,000
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