On December 31 of Swift Company’s first year, $51,000 of accounts receivable was not yet collected. Swift estimated that $2,100 of its accounts receivable was uncollectible and recorded the year-end adjusting entry. 1. Compute the realizable value of accounts receivable reported on Swift’s year-end balance sheet. 2. On January 1 of Swift’s second year, it writes off a customer’s account for $400. Compute the realizable value of accounts receivable on January 1 after the write-off.
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.
QS 9-7 (Algo) Reporting allowance for doubtful accounts LO P2
On December 31 of Swift Company’s first year, $51,000 of
1. Compute the realizable value of accounts receivable reported on Swift’s year-end balance sheet.
2. On January 1 of Swift’s second year, it writes off a customer’s account for $400. Compute the realizable value of accounts receivable on January 1 after the write-off.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
