Assume the following for Liana: Adjusted Trial Balance: Debit Credit Balance Accounts Receivable 24,000 16,000 8,000 Sales 21,000 21,000 Credit losses (bad debts expense) 900 900 Sales Returns 200 200 Allowance for Doubtful Accounts 500 1,200 700 Sales Discounts 150 150 Also known: all sales are on credit; no AR were reinstated; beginning Accounts Receivable was $3,000 > Using T-accounts, give entries for: Credit sales Sales returns Write-off of receivables Credit losses (bad debts provision) Collection of receivables What was the beginning balance of Allowance for Doubtful Accounts? > Give complete adjusting entries if know that adjusting entries included the following changes: + $200 + $75 + $40 Interest Receivable Unearned Revenue Prepaid Rent Utilities Payable + $150 - $12 Supplies
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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