Proportion Expected to Default Accounts Receivable Category Amount 0-20 days 21–40 days 41–60 days Over 60 days $ 86,550 19,400 10,250 4,900 $121,100 0.01 0.06 0.12 0.25
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.
| Cindy Bagnal, the manager of Cayce Printing Service, has provided the following aging schedule for Cayce’s $4,600 of receivables that should be written off. Required: 1. Journalize the $4,600 write-off. 2. Determine the desired postadjustment balance in allowance for doubtful accounts (round each aging category to the nearest dollar). 3. If the balance in allowance for doubtful accounts before the $4,600 write-off was a debit of $700, compute |
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