The following balances have been excerpted from Tito Piccolo’s statement of financial position: December 31 January 1 Prepaid Insurance P 6,000 P 7,500 Interest Receivable 3,700 14,500 Salaries Payable 61,500 53,000 Accounts Receivable 550,000 415,000 Allowance for bad debts 40,000 25,000 Tito Piccolo Company reported the following during 2020 the following items: Insurance premiums paid P 41,500 Interest collected 123,500 Salaries paid 481,000 Sales 1,980,000 No uncollectible accounts were written off during 2020. Had the cash basis of accounting been used instead, how much have been reported as receipts for 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.
The following balances have been excerpted from Tito Piccolo’s
|
|
December 31 |
January 1 |
|
Prepaid Insurance |
P 6,000 |
P 7,500 |
|
Interest Receivable |
3,700 |
14,500 |
|
Salaries Payable |
61,500 |
53,000 |
|
|
550,000 |
415,000 |
|
Allowance for |
40,000 |
25,000 |
Tito Piccolo Company reported the following during 2020 the following items:
|
Insurance premiums paid |
P 41,500 |
|
Interest collected |
123,500 |
|
Salaries paid |
481,000 |
|
Sales |
1,980,000 |
No uncollectible accounts were written off during 2020. Had the cash basis of accounting been used instead, how much have been reported as receipts for 2020?
Step by step
Solved in 2 steps
