Drake Sdn Bhd has the following balance on 1 January 2017: Accounts receivable MYR 20,500 For the year ended 31 December 2017, the following information were obtained: Total sales MYR 250,000 (including cash sales MYR 50,000) Payment by debtors MYR 52,500 Return by debtors MYR 3,000 Bad debts MYR 1,000 It is the business policy to provide 2% allowance for doubtful debts on the outstanding accounts receivable at the end of the year What is the ending balance of allowance for doubtful debts as at 31 December 2017? Select one: a. MYR 2,870 b. MYR 4,410 c. MYR 3,280 d. MYR 2,880
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.
|
Drake Sdn Bhd has the following balance on 1 January 2017: |
|||
|
|
MYR 20,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December 2017, the following information were obtained: |
|||
|
Total sales |
MYR 250,000 |
(including cash sales MYR 50,000) |
|
|
Payment by debtors |
MYR 52,500 |
|
|
|
Return by debtors |
MYR 3,000 |
|
|
|
|
MYR 1,000 |
|
|
|
|
|
|
|
|
It is the business policy to provide 2% allowance for doubtful debts on the outstanding accounts receivable at the end of the year |
What is the ending balance of allowance for doubtful debts as at 31 December 2017?
Step by step
Solved in 2 steps
