The following is a portion of the current assets section of the balance sheets of The Sweet Cafe at December 31, 2023 and 2022: Accounts receivable, less allowance for bad debts of $14,400 (for 2023) and $10,200 (for 2022). 12/31/23 $487,200 a. Accounts written off b1. Write off on the current ratio b2. Write off on net income and ROE c. Sweet Cafe's sales in 2023 12/31/22 $431,600 Required: a. If bad debts expense for 2023 totaled $32,800, what was the amount of accounts receivable written off during the yeam b. The December 31, 2023, Allowance account balance includes $6,800 for a past due account that is not likely to be collected. This account has not been written off. If it had been written off, what would have been the effect of the write off on: 1. The current ratio at December 31, 2023? 2. Net income and ROE for the year ended December 31, 2023? c. What do you suppose was the level of The Sweet Cafe's sales in 2023, compared to 2022?
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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