Analyze the transactions and prepare any necessary adjusting entries at August 31, 2015. II. The Sunflower Wholesale Company needs to prepare financial statements at the end of August 2015 for presentation to its bank. An unadjusted trial balance as of August 31, 2015, is presented on this page. a. The company anticipates that of the P25,000 in accounts receivable from customers, P2,500 will not be collected. b. The note payable requires the entire P30,000 in principal plus interest at 10% to be paid on July 31. 2016. The date of the loan is August 1. 2015. c. Depreciation on the equipment for the month of August is P500. d. The note receivable is dated August 16, 2015. The note requires the entire P20,000 in principal plus interest at 12% to be repaid in 120 days (the loan was outstanding 15 days during August). e. The prepaid rent of P6,000 represents rent for the months of August and September.
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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