Lewis Company uses the allowance method for recording its expected credit losses. It estimates bad debts at 2% of credit sales, which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000, and the Allowance for Doubtful Accounts had a balance of $12,200 before adjustments. At what amount will accounts receivable be reported on Lewis's December 31 Balance Sheet (i.e., what is the Net Realizable Value of its accounts receivables)? Select one: a. 150,000 b. 137,800 c. 119,800 d. 132,000 e. 134,800
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.
Lewis Company uses the allowance method for recording its expected credit losses. It estimates
At what amount will accounts receivable be reported on Lewis's December 31 Balance Sheet (i.e., what is the Net Realizable Value of its accounts receivables)?
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