X Corporation expects the following transaction in 2020. Their first year of operations. · Allowance for bad debts, end of year is 80,000 · Sales (some receivables are collectible in 2021) 1,500,000 · Bad debt written offs during the year 10,000 · Disbursements of costs and expenses 1,200,000 · Disbursements for income taxes 90,000 · Accounts receivable, end of year, net- 70,000 · Purchases of fixed assets for cash 400,000 · Proceeds from issuance of ordinary shares 580,000 · Proceed from short-term borrowings 100,000 · Payments on short-term borrowings 60,000 · Depreciation on fixed assets 80,000 · Loss on sale of fixed assets (book value 100,000) 10,000 What is the cash balance at December 31, 2020? a. 470,000 b. 300,000 c. 390,000 d. 370,000 e. None of the above
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.
X Corporation expects the following transaction in 2020. Their first year of operations.
· Allowance for
· Sales (some receivables are collectible in 2021) 1,500,000
· Bad debt written offs during the year 10,000
· Disbursements of costs and expenses 1,200,000
· Disbursements for income taxes 90,000
·
· Purchases of fixed assets for cash 400,000
· Proceeds from issuance of ordinary shares 580,000
· Proceed from short-term borrowings 100,000
· Payments on short-term borrowings 60,000
·
· Loss on sale of fixed assets (book value 100,000) 10,000
What is the cash balance at December 31, 2020?
Step by step
Solved in 3 steps
