1. At January 1, 2020, Jamin Co. had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past experience, 2% of Jamin’s credit sales have been uncollectible. During 2020 Jamin wrote off P325,000 of uncollectible accounts. Credit sales for 2020 were P9,000,000. In its December 31, 2020 balance sheet, what amount should Jamin report as allowance for uncollectible 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.
1. At January 1, 2020, Jamin Co. had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past experience, 2% of Jamin’s credit sales have been uncollectible. During 2020 Jamin wrote off P325,000 of uncollectible accounts. Credit sales for 2020 were P9,000,000. In its December 31, 2020 balance sheet, what amount
should Jamin report as allowance for uncollectible accounts?
2. The following accounts were abstracted from poxxy Co.’s unadjusted
December 31, 2020:
Accounts receivable 1,000,000
Allowance for uncollectible accounts 8,000
Net credit sales 3,000,000
Poxxy estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2020, the allowance for uncollectible accounts should have a
credit balance of __________.
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