Based on its past collection experience, Brody Company provides for bad debts at the rate of 2 percent of net credit sales. On January 1, 2002, the allowance for doubtful accounts credit balance was ₱10,000. During 2002, Brody wrote off ₱18,000 of uncollectible receivables and recovered ₱5,000 on accounts written off in prior years. If net credit sales for 1999 totaled ₱1,000,000, the doubtful accounts expense for 2002 should be a. ₱17,000. b. ��20,000. c. ₱23,000. d. ₱35,000.
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.
Based on its past collection experience, Brody Company provides for
of 2 percent of net credit sales. On January 1, 2002, the allowance for doubtful accounts
credit balance was ₱10,000. During 2002, Brody wrote off ₱18,000 of uncollectible
receivables and recovered ₱5,000 on accounts written off in prior years. If net credit sales
for 1999 totaled ₱1,000,000, the doubtful accounts expense for 2002 should be
a. ₱17,000.
b. ��20,000.
c. ₱23,000.
d. ₱35,000.
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