Von Company had the following data relating to its Accounts Receivable: Accounts Receivable, December 31, 2019- P1,300,000 Allowance for uncollectible accounts, December 31, 2019- P25,400 2020 credit sales- P5,400,000 Collections from customers in 2020, including recoveries- P4,610,000 Accounts written-off on August 24, 2020- P125,000 Recoveries of accounts previously written off in prior years- P25,000 Estimated uncollectible receivables per aging, Dec. 31, 2020- P165,000 Von’s net accounts receivable at December 31, 2020 was A. P1,900,000 B. P1,800,000 C. P1,825,000 D. P1,850,000
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.
Von Company had the following data relating to its
- Accounts Receivable, December 31, 2019- P1,300,000
- Allowance for uncollectible accounts, December 31, 2019- P25,400
- 2020 credit sales- P5,400,000
- Collections from customers in 2020, including recoveries- P4,610,000
- Accounts written-off on August 24, 2020- P125,000
- Recoveries of accounts previously written off in prior years- P25,000
- Estimated uncollectible receivables per aging, Dec. 31, 2020- P165,000
Von’s net accounts receivable at December 31, 2020 was
A. P1,900,000
B. P1,800,000
C. P1,825,000
D. P1,850,000
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