Quebec Market reports the following analysis of potential losses in its accounts receivable: Age Past Due Receivable Balance Estimated Loss (%) 0-30 days past due $67,200 0.5% 31-60 days past due 30,000 1.8% 61-90 days past due 18,000 4.3% Over 90 days past due 3,300 45.5% Total $118,500 The balance of Allowance for Doubtful Accounts is $600 credit balance on December 31, 2019 prior to adjustments. a. Compute bad debts expense that will be recorded for 2019. (Round to nearest whole dollar.) b. What is the amount of net accounts receivable to be reported on Quebec Market’s December 31, 2019 balance sheet?
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.
- Quebec Market reports the following analysis of potential losses in its
accounts receivable :
|
Age Past Due |
Receivable Balance |
Estimated Loss (%) |
|
0-30 days past due |
$67,200 |
0.5% |
|
31-60 days past due |
30,000 |
1.8% |
|
61-90 days past due |
18,000 |
4.3% |
|
Over 90 days past due |
3,300 |
45.5% |
|
Total |
$118,500 |
|
The balance of Allowance for Doubtful Accounts is $600 credit balance on December 31, 2019 prior to adjustments.
a. Compute
b. What is the amount of net accounts receivable to be reported on Quebec Market’s December 31, 2019 balance sheet?
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