The allowance for doubtful accounts of Chico Company as of January 1, 20X1, amounted to P550,000. During 20X1, the company wrote off P250,000 of its accounts receivable. 1. Compute for the allowance for doubtful accounts as of December 31, 20X1, before the year-end adjustment Chico Company reported the following balances as of December 31, 20X1, before any year-end adjustments: Accounts receivable 7,500,000 Allowance for doubtful accounts ? (Answer in 1) Sales 20,000,000 Scenario A. Percentage of Sales: The entity estimated that 5% of the sales would be uncollected. Compute for the following: 2. Allowance for doubtful accounts as of December 31, 20X1 (after the year-end adjustment) 3. Doubtful accounts expense on December 31, 20X1 4. Carrying amount of the accounts receivable as of December 31, 20X1
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.
The allowance for doubtful accounts of Chico Company as of January 1, 20X1, amounted to P550,000. During 20X1, the company wrote off P250,000 of its
1. Compute for the allowance for doubtful accounts as of December 31, 20X1, before the year-end adjustment Chico Company reported the following balances as of December 31, 20X1, before any year-end adjustments:
Accounts receivable 7,500,000
Allowance for doubtful accounts ? (Answer in 1)
Sales 20,000,000
Scenario A. Percentage of Sales:
The entity estimated that 5% of the sales would be uncollected.
Compute for the following:
2. Allowance for doubtful accounts as of December 31, 20X1 (after the year-end adjustment)
3. Doubtful accounts expense on December 31, 20X1
4. Carrying amount of the accounts receivable as of December 31, 20X1
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