The adjusted trial balance of Blossom Company for the year ended December 31, 2020, is as follows: Cash Accounts Receivable Notes Receivable Inventory Equipment Allowance for Doubtful Accounts Accumulated Depreciation-Equipment Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Sales Revenue Interest Revenue Cost of Goods Sold Salary and Wages Expense Rent Expense Bad Debt Expense Service Charge Expense Debit $5,900 2,200 5,800 9,500 7,000 1.000 Credit $300 1,000 1,100 600 16,500 10,500 7,000 1,200 500 60 30 $40,190 10,090 100 $40,190
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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