Question 2 At the beginning of the year, HR-Plus consulting had a net accounts receivable balance of 1,200,000. This balance includes an Allowance for Doubtful Accounts of $62,500, During the year, the following transactions occurred: Total Sales on account were $15,280,000 Wrote off $43,000 from the Department of Forestry as uncollectable At year end, the accounts receivable balances were as follows: Age Collection Probability Amount 0-30 days 98% $800,000 31-60 days 90% 400,000 61-90 days 75% 116,000 Over 90 days 50% 16,000 REQUIRED: Show the transactions for items i and ii How much Accounts Receivable was collected during the year Calculate the ending balance of the Allowance for Doubtful Accounts
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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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