Company had the following information relating to its accounts receivable: · Accounts receivable, 12/31/2020- P780,000 · Credit sales during 2021- P3,290,000 · Collections from customers during 2021 (excluding recovery of P20,000)- P3,640,000 · Accounts written off during 2021- P85,000 · Collection of accounts written off in prior years- P20,000 · Estimated uncollectible accounts per aging at 12/31/2021- P63,000
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.
The Company had the following information relating to its
· Accounts receivable, 12/31/2020- P780,000
· Credit sales during 2021- P3,290,000
· Collections from customers during 2021 (excluding recovery of P20,000)- P3,640,000
· Accounts written off during 2021- P85,000
· Collection of accounts written off in prior years- P20,000
· Estimated uncollectible accounts per aging at 12/31/2021- P63,000
At December 31, 2021, The Company's accounts receivable before allowance for uncollectible accounts should be
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