At the close of its first year of operations, December 31, 2004, Linn Company had accounts receivable of ₱490,000, after deducting the related allowance for doubtful accounts. During 2004, the company had charges to bad debt expense of ₱90,000 and wrote off, as uncollectible, accounts receivable of ₱40,000. What should the company report on its balance sheet at December 31, 2004 as accounts receivable before the allowance for doubtful accounts?
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.
At the close of its first year of operations, December 31, 2004, Linn Company had accounts receivable of ₱490,000, after deducting the related allowance for doubtful accounts. During 2004, the company had charges to
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