Timmons Company had a January 1 credit balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year: Apr. 15 Bard’s account receivable of $5,700 was deemed un-collectable. July 1 Drake paid the full amount of a previously written-off account receivable. This receivable of $2,300 had been written off in the prior year. Dec. 31 Bad debts expense of $7,500 was recorded. What amount should appear in the allowance for doubtful accounts in the December 31 balance sheet for the current year?
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.
Timmons Company had a January 1 credit balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
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Apr. 15 |
Bard’s account receivable of $5,700 was deemed un-collectable. |
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July 1 |
Drake paid the full amount of a previously written-off account receivable. This receivable of $2,300 had been written off in the prior year. |
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Dec. 31 |
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What amount should appear in the allowance for doubtful accounts in the December 31 balance sheet for the current year?
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