Exercise 8-11 Estimating bad debt expense-percentage of sales LO3 Selected unadjusted account balances at December 31, 2023, are shown below for Demron Servicing. Debit $71,000 Account Accounts receivable Allowance for doubtful accounts Sales (all on credit) Sales discounts 9,000 $ Credit 1,120 489,000 Required: a. Demron estimates that 2% of net credit sales will prove to be uncollectible. Prepare the adjusting entry required on De 2020, to estimate uncollectible receivables.
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.
Aa-2
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