The Financial Statement Effects of VWrite-Offs Jeffrey Company wrote off $500 in accounts re- ceivable owed from Michael Company. Before the write-off, Net Accounts Receivable for Jeffrey Company were $144,000, which consisted of Accounts Receivable of $150,000, and an Allowance for Doubtful Accounts of $6,000. Which of the following effects did this write-off have on the financial statements of Jeffrey Company? Net Accounts Receivable declined by $500 Total Assets declined by $50O a. b. C. All of the above d. None of the above
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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