At the end of the first quarter of Year 2, McKinney & Co. reevaluates its receivables. McKinney & Co.’s management decides that $8,500 due from Mangold Corporation will not be collectible. This amount was previously included in the allowance account (refer to RE7-5). Prepare the journal entry to record the write-off for McKinney & Co.
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.
At the end of the first quarter of Year 2, McKinney & Co. reevaluates its receivables. McKinney & Co.’s management decides that $8,500 due from Mangold Corporation will not be collectible. This amount was previously included in the allowance account (refer to RE7-5). Prepare the journal entry to record the write-off for McKinney & Co.
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