Supersonic Company was authorized to issue P7, 000,000 face values, 12%, 10-years bonds on April 1, 2019. Interest on the bonds is payable semiannually on April I and October I of each year. The bonds were sold to underwriters on April 1, 2019 at 106. The entity amortizes discount or premium only at the end of the fiscal year, using the straight line method. Required: 1. Prepare the jourmal entries for 2019 and 2020 including adjustment at the end of each year. Use memorandum approach. 2. Present the bonds payable in the statement of financial position on December 31, 2020.
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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