The following data are available on December 31, 2010 for Precious Company: Sales 6,000,000 Accounts Receivable 1,500,000 Allowance for doubtful accounts, beg. 75,000 beg. Accounts written off 97,500 Recovery of accounts previously written off 15,000 Precious company estimates that 3% of sales prove uncollectible. What amount of allowance for doubtful accounts expense will be reported on December 31, 2010?
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 data are available on December 31, 2010 for Precious Company:
Sales 6,000,000
Allowance for doubtful accounts, beg. 75,000 beg.
Accounts written off 97,500
Recovery of accounts previously written off 15,000
Precious company estimates that 3% of sales prove uncollectible. What amount of allowance for doubtful accounts expense will be reported on December 31, 2010?
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