What is the doubtful accounts expense for 2011?
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.
Problem 25
From inception of operations to December 31, 2021, Edulsa Corporation provided for uncollectible
The balance in the allowance for doubtful accounts was P65,000 at January 1, 2021. During 2021, credit sales totaled P4,500,000, interim provisions for doubtful accounts were made at 2% of credit sales, P45,000 of bad debts were written off and recoveries of accounts previously written off amounted of P7,500. Edulsa Corporation installed a computer facility in November 2021 and an aging of accounts receivable was prepared for the first time as of December 31, 2021. A summary of the aging is as follows:
Classification
Percentage of
(By month of sale) Amount November to
uncollectibility
December P 570,000 2%
July to October 300,000 10%
January to June 200,000 25%
Prior to January 1,
2021 65,000 75%
Based on the review of collectibility of the account balances in the over “Prior to January 1, 2021” category, additional receivables totaling P30,000 was written off as of December 31, 2021. Effective with the year ended December 31, 2021, Edulsa Corporation adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year end aging analysis of accounts receivable.
- What is the doubtful accounts expense for 2011?
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