A company is getting ready to publish their annual financial statements. They have the following beginning balances: Beginning balance for gross accounts receivable (A) $2,000 beginning balance for Allowance for doubtful accounts (XA) $300 assume that no cash collections were made during the accounting period and continue to assume that the $10,000 In credit sales were made in the current period. Suppose that 5% of accounts receivable are typically not collectible. If the balance sheet method is used, what are the reported (a.) bad debt expense and (b.) ending balance for the allowance for doubtful accounts?
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.
A company is getting ready to publish their annual financial statements. They have the following beginning balances:
Beginning balance for gross accounts receivable (A) $2,000
beginning balance for Allowance for doubtful accounts (XA) $300
assume that no cash collections were made during the accounting period and continue to assume that the $10,000 In credit sales were made in the current period. Suppose that 5% of accounts receivable are typically not collectible. If the balance sheet method is used, what are the reported (a.)
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