he allowance for doubtful debts account has a debit balance at the start of the year of $1,000. At the end of the year, debts of $770 inclusive GST are written off and the allowance for doubtful debts is to be adjusted for 5% of the net credit sales of $60,000 exclusive GST. The new amount of the allowance for doubtful debts that is deducted from accounts receivable in the balance sheet is $__________. Group
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.
Step by step
Solved in 3 steps with 3 images
