1 Calculate, record, post, and analyze the adjustment to recognize bad debt expense under the following information provided: Account DR CR Accounts receivable Allowance for doubtful accounts Net credit sales 365,000 15,000 827,000 Total Estimated Uncollectible Amount % Estimated Number of Days Outstanding 0-30 31-60 Receivable Uncollectible 175,000 1.00% 80,000 2.00% 5.00% 20.00% 40.00% 61-90 50,000 91-120 Over 120 TOTALS 42,000 18,000 365,000 age 1 Page 2 Bad Debt Expense E Debit General Ledger Accounts Receivable A Allowance for Doubtful XA Debit Credit Debit Credit Credit
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.
The account receivable is shown net of allowance for doubtful debt in the balance sheet.
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