The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of Rose Corporation are $500,000 and $50,000 respectively. Net credit sales has a total of $4,500,000 during the year while collections amounted to $4,400,000. Bad debts expense for the year is $30,000. Included in the collections was a $10,000 account which was written off in the prior year and was recovered during the current year. At year end, how much is the net realizable value of the Accounts Receivable?
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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