Oro Company prepared an aging of its accounts receivable at December 31, 2020 and determined that the net realizable value of the accounts receivable was P 2,500,000. Additional information is available as follows: Allowance for uncollectible accounts at January 1 280,000 Accounts written off as uncollectible 230,000 Accounts receivable at December 31 2,700,000 Uncollectible accounts recovery 50,000 REQUIRED: What is the uncollectible accounts expense for December 31, 2020?
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.
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