Goyo uses the allowance account for uncollectible trade accounts receivable. The allowance is based upon 3% of past due accounts (over 120 days) and 1% of current accounts as of the close of each month. Due to changing economic conditions and climate, the number of past-due accounts has increased insignificantly, and management has decided to increase the percentage based on past due accounts to 5%. The following balances are available: As of Nov. 30, 20x3 Debit Credit Accounts Receivable P780,000 - Past due accounts (included in A/R) 24,000 - Allowance for Doubtful Accounts - P56,000 As of Dec. 31, 20x3 Debit Credit Accounts Receivable P860,000 - Past due accounts (included in A/R) 60,000 - Allowance for Doubtful Accounts 18,000 - I NEED ADJUSTMENTS THANKSSS
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.
- Goyo uses the allowance account for uncollectible trade
accounts receivable . The allowance is based upon 3% of past due accounts (over 120 days) and 1% of current accounts as of the close of each month. Due to changing economic conditions and climate, the number of past-due accounts has increased insignificantly, and management has decided to increase the percentage based on past due accounts to 5%. The following balances are available:
|
As of Nov. 30, 20x3 |
||
|
|
Debit |
Credit |
|
Accounts Receivable |
P780,000 |
- |
|
Past due accounts (included in A/R) |
24,000 |
- |
|
Allowance for Doubtful Accounts |
- |
P56,000 |
|
As of Dec. 31, 20x3 |
||
|
|
Debit |
Credit |
|
Accounts Receivable |
P860,000 |
- |
|
Past due accounts (included in A/R) |
60,000 |
- |
|
Allowance for Doubtful Accounts |
18,000 |
- |
I NEED ADJUSTMENTS THANKSSS
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