During the year, IM Co. had sales of $900,000 including cash sales of $200,000 and $700,000 on account. At year end, December 31, they have gross accounts receivable $100,000 and (unadjusted) $1,000 credit balance in Allowance for Doubtful Accounts. Historically, uncollectible accounts have been 5% of accounts receivable. Allowance for Doubtful Accounts on the Balance Sheet at December 31 should be" O '$3,950 " O $4,000* O '$4,950" O '$5,000 " O '$35,000"
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. "During the year, IM Co. had sales of $900,000 including cash sales of $200,000 and $700,000 on account. At year end, December 31, they have gross
O $4,000*
O '$4,950"
O '$5,000 "
O '$35,000"
2. Walmart purchased chairs for its office on account for $300 plus sales taxes in Manitoba where GST is 5% and PST is 7%. Walmart's
O a debit to PST Payable for $21
O a credit to HST Payable for $ 36
O a debit to HST Recoverable for $ 36
O debit to Accounts Payable for $300
O none of the above
Step by step
Solved in 2 steps
