On January 1, 2021, Vee Company had Accounts Receivable and Allowance for Uncollectible Accounts of P4,650,000 and P120,000, respectively. Sales (all on credit) during 2020 amounted to P15,000,000. Accounts of P75,000 were written off during the year. Analysis of Vee Company's accounts receivable at December 31, 2021 revealed the following: Age Amount Est. uncollectible 0-60 da P3,250,000 1% 61-120 da 2,200,000 3% Over 120 da 800,000 10% There are no other transactions affecting accounts receivable. How much is the carrying amount/amortized cost of accounts receivable at December 31, 2021?
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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.
On January 1, 2021, Vee Company had Accounts Receivable and Allowance for Uncollectible Accounts of P4,650,000 and P120,000, respectively. Sales (all on credit) during 2020 amounted to P15,000,000. Accounts of P75,000 were written off during the year. Analysis of Vee Company's accounts receivable at December 31, 2021 revealed the following:
Age Amount Est. uncollectible
0-60 da P3,250,000 1%
61-120 da 2,200,000 3%
Over 120 da 800,000 10%
There are no other transactions affecting accounts receivable.
How much is the carrying amount/amortized cost of accounts receivable at December 31, 2021?
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