tar Company provided the following transactions affecting accounts receivable during the year ended December 31, 2014: Sales (cash and credit) 5,900,000 Cash received from credit customers, all of whom took advantage of the discount feature of the entity’s credit terms 4/10, n/30 3,024,000 Cash received from cash customers 2,100,000 Accounts receivable written off as worthless 50,000 Credit memorandum issued to credit customers for sales returns and allowances 250,000 Cash refunds given to cash customers for sales returns and allowances 20,000 Recoveries on accounts receivable written off as uncollectible in prior periods (not included in cash amount stated above) 80,000 The following balances were taken from January 1, 2014 statement of financial position: Accounts receivable 950,000 Allowance for doubtful accounts 100,000 The entity provided for uncollectible accounts losses by crediting allowance for doubtful accounts in the amount of P 70,000 for the current year. 23. What is the balance of accounts receivable on December 31, 2014 24. What is the balance of allowance for doubtful accounts on December 31, 2014?
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.
Star Company provided the following transactions affecting accounts
receivable during the year ended December 31, 2014:
Sales (cash and credit) 5,900,000
Cash received from credit customers, all of whom
took advantage of the discount feature of the
entity’s credit terms 4/10, n/30 3,024,000
Cash received from cash customers 2,100,000
Accounts receivable written off as worthless 50,000
Credit memorandum issued to credit customers
for sales returns and allowances 250,000
Cash refunds given to cash customers for sales
returns and allowances 20,000
Recoveries on accounts receivable written off as
uncollectible in prior periods (not included in
cash amount stated above) 80,000
The following balances were taken from January 1, 2014 statement of financial position:
Accounts receivable 950,000
Allowance for doubtful accounts 100,000
The entity provided for uncollectible accounts losses by crediting allowance for doubtful accounts
in the amount of P 70,000 for the current year.
23. What is the balance of accounts receivable on December 31, 2014
24. What is the balance of allowance for doubtful accounts on December 31, 2014?
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