BC Corp. reported a P500,000 account receivable balance at the beginning of the calendar year. For the year, it reported net credit sales of P4,000,000 and collections from customers of P4,050,000. An analysis of the sales showed that a sale amounting to P40,000 was shipped to the buyer on Dec. 31 under FOB destination term while a sale amounting to P50,000 was shipped to the buyer on Jan. 1 under FOB shipping point term. Included in the collections was an over-payment by a customer in the amount of P13,000. Not included in the initial sales and collections amounts are the following: (A) Sales made to officers made under customary terms, P200,000 of which were collected – P700,000 and (B) Claims against common carrier – P 200,000. How much should ABC report as accounts receivables as of Dec. 31?
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.
BC Corp. reported a P500,000 account receivable balance at the beginning of the calendar year. For the year, it reported net credit sales of P4,000,000 and collections from customers of P4,050,000. An analysis of the sales showed that a sale amounting to P40,000 was shipped to the buyer on Dec. 31 under FOB destination term while a sale amounting to P50,000 was shipped to the buyer on Jan. 1 under FOB shipping point term. Included in the collections was an over-payment by a customer in the amount of P13,000. Not included in the initial sales and collections amounts are the following:
(A) Sales made to officers made under customary terms, P200,000 of which were collected – P700,000 and
(B) Claims against common carrier – P 200,000. How much should ABC report as accounts receivables as of Dec. 31?
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