You were assigned to audit the "TRADE RECEIVABLES" account with a debit balance of P2,000,000 of Red Company for the fiscal year ending June 30, 2020. Subsidiary details revealed the following: Trade accounts receivable 730,000 Trade notes receivable 100,000 Installment receivable, normally due 1 to 2 years 300,000 Customers' accounts reporting credit balances arising from sales return Advance payments for purchase of merchandise (30,000) 150,000 Customers' accounts reporting credit balances arising from advance payments Cash advance to subsidiary Claim from insurance entity (20,000) 400,000 15,000 300,000 Subscriptions receivable due in 60 days IOUs from employees Accrued interest receivable 45,000 10,000 2,000,000 T. Determine the amount to be presented as "Trade and Other Receivables" under current assets.
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.
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