Prepare the adjusting entries and the journals needed to record the above transactions properly the backup method as well as the direct deletion method!
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.
AB Co made a credit sale to DE Co for $200,000 on July 19x9. It is known that at the end of 19x9 there was an outstanding receivable of $47,000. Management
estimates that $25,000 will be uncollectible.
In July 19x9 the collections department stated that a receivable of $5,000 was written off from
bookkeeping because it is impossible to receive payment from DE Co. Unexpectedly month
October 19x9 DE Co pays its outstanding debt.
Requested:
Prepare the
the backup method as well as the direct deletion method!
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