BBB Company's check book balance on December 31,2020 was P5,000,000. addition, BBB Company held the following items in its safe on that date: Check payable to BBB Company, dated January 2,2021 in payment of a sale made in December 2020, included in December 31 check book balance 2,000,0C Check payable on BBB Company, deposited December 15 and not included in December 31 checkbook balance but returned by bank on December 30 stamped "NSF". The check was deposited on January 2, 2021 and cleared on January 9,2021. 500,00 Check drawn on BBB Company's account, payable to vendor, dated and recorded in BBB Company's books on December 31,2020 but not mailed until January 10,2021 300,0C
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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