Financial statement are prepared at the end of every month for the J Company. Based on the following information and account balances, what is the correct amount that should be recorded on June 30th to recognize bad debt expense if J Company uses the percentage of receivables method for recognizing bad debt expense? June 30th Balance - Accounts Receivable 25,000 Management's Estimate of Bad Debt Expense based on Accounts Receivable 5% Allowance of Doubtful Accounts (Credit Balance BEFORE June adjustment) 500
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.
Financial statement are prepared at the end of every month for the J Company. Based on the following information and account balances, what is the correct amount that should be recorded on June 30th to recognize
| June 30th Balance - |
25,000 |
| Management's Estimate of Bad Debt Expense based on Accounts Receivable | 5% |
| Allowance of Doubtful Accounts (Credit Balance BEFORE June adjustment) | 500 |
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