On December 31, the end of the accounting period, Maricall Center has an outstanding Accounts Receivable of Php 72,000 and an Allowance for Impairment Loss balance of Php 600 prior to the year-end adjustments. Bad debts are estimated at 2% of the accounts receivable. How much are the bad debts expense to be charged to the Impairment Loss account? Prepare the adjusting journal entry.
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.
On December 31, the end of the accounting period, Maricall Center has an outstanding
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