Harvest Company has the following December 31 General Ledger Account Balances after adjustments relating to Sales and Receivables: Sales $28,500 (of which 40% are credit sales still outstanding) Sales returns and Allowances $1,000 Miscellaneous Receivables $1,212 Allowance for Doubtful Accounts $1,502 Long term Receivables $9,014 Advances to Shareholders and Directors $4,266 Notes Receivables $2,903 (Current Portion) Bad Debt Expense is estimated as 4% of credit sales Required 1: Assuming no other transaction happened, what is the Bad Debt Expense reported on Decmber 31st? Required 2: Assuming no other transaction happened, what is the adjusted net balance of all current Receivables at December 31st? Required 3: Assuming no other transaction happened, what is the adjusted net balance of Accounts Receivables at December 31st?
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.
Harvest Company has the following December 31 General Ledger Account Balances after adjustments relating to Sales and Receivables: Sales $28,500 (of which 40% are credit sales still outstanding) Sales returns and Allowances $1,000 Miscellaneous Receivables $1,212 Allowance for Doubtful Accounts $1,502 Long term Receivables $9,014 Advances to Shareholders and Directors $4,266 Notes Receivables $2,903 (Current Portion)
Required 1: Assuming no other transaction happened, what is the Bad Debt Expense reported on Decmber 31st?
Required 2: Assuming no other transaction happened, what is the adjusted net balance of all current Receivables at December 31st?
Required 3: Assuming no other transaction happened, what is the adjusted net balance of Accounts Receivables at December 31st?
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