For many years, Carefree Company has estimated BadDebt Expense using the aging of accounts receivablemethod. Assuming Carefree has no write-offs or recoveries, its estimate of uncollectible receivables resulting fromthe aging analysis equalsa. Bad Debt Expense for the current period.b. The ending balance in the Allowance for DoubtfulAccounts for the period.c. The change in the Allowance for Doubtful Accountsfor the period.d. Both ( a ) and ( c ).
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.
For many years, Carefree Company has estimated
Debt
method. Assuming Carefree has no write-offs or recoveries, its estimate of uncollectible receivables resulting from
the aging analysis equals
a. Bad Debt Expense for the current period.
b. The ending balance in the Allowance for Doubtful
Accounts for the period.
c. The change in the Allowance for Doubtful Accounts
for the period.
d. Both ( a ) and ( c ).
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