Based on the following information: Sales returns and allowances (credit sales) $20,000 Cash sales $1,200,000 Unadjusted balance in Allowance for Doubtful Accounts 1,000 credit Credit sales 2,150,000 If bad debts are estimated to be 2% of net credit sales, in the adjusting entry to recognize uncollectible accounts, the debit to expense will be for a. $52,000 b. $51,000 c. $50,000 d. $42,600
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 the following information:
Sales returns and allowances
(credit sales) $20,000
Cash sales $1,200,000
Unadjusted balance in Allowance
for Doubtful Accounts 1,000 credit
Credit sales 2,150,000
If
a. $52,000
b. $51,000
c. $50,000
d. $42,600
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