On Jan. 01, Ronald Co. accounts receivable balance is P50,000. On Jan. 13, the company sold items on credit worth P20,000 to Mr. Uy. On Jan. 25, he has another sales worth P45,000 where 50% is on cash. On Jan. 26, he collected P15,000 from Mr. Uy. The related allowance for doubtful accounts has a balance of P5,000. Compute the carrying amount of accounts receivable of Ronald Co. (Sample Answer: P20,000) *
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 Jan. 01, Ronald Co.
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