The following data pertains to ABC Corp: Credit sales for the period, P3,000 Credit balance of the allowance for bad debts, beg P8,000 Accounts Receivable P1,000,000 ABC estimates that 3% of accounts receivable have been uncollectible. After provision is made for the bad debts expense for the period, the allowance for bad debts at the end of the period would be: 30,000 38,000 82,000 90,000
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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