QUESTION 2: Accounts Receivable 100,000 2,000 Allowance for Uncollectible Accounts The company uses the "aging method" for determining its Doubtful accounts. The adjustment is made only once a year at the end of December. The aging analysis is as follows: Aging Category Not yet due 30 days past due 60 days past due Over 90 days past due Estimated Doubtful % 2% Amount $40,000 $30,000 $20,000 $10,000 3% 4% 5% Required: a) Prepare the adjustment in journal entry format. b) Show the balances of the accounts that will be reported in the 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.
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