Washing Co. has the following information on December 31, 20x1 before any year-end adjustments. Accounts receivable, Jan. 1 80,000 Net credit sales 270,000 Collections from customers (including recoveries) 140,000 Allowance for doubtful accounts, Jan. 1 10,000 Write-offs 5,000 Recoveries 1,000 Percentage of receivables 5% How much is the bad debt expense? a. 4,250 b. 4,300 c. 4,550 d. 10,300
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.
Washing Co. has the following information on December 31, 20x1 before any year-end adjustments.
Net credit sales 270,000
Collections from customers (including recoveries) 140,000
Allowance for doubtful accounts, Jan. 1 10,000
Write-offs 5,000
Recoveries 1,000
Percentage of receivables 5%
How much is the
a. 4,250
b. 4,300
c. 4,550
d. 10,300
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