A trial balance before adjustments included the following: Debit Credit Sales P 425,000 Sales returns and allowances P 14,000 Accounts receivable 53,000 Allowance for doubtful accounts 760 If the estimate of uncollectible is made by taking 10% of gross accounts receivables, the net realizable value of accounts receivable to be reported in the statement of financial position is
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.
A
| Debit | Credit | |
| Sales | P 425,000 | |
| Sales returns and allowances | P 14,000 | |
| Accounts receivable | 53,000 | |
| Allowance for doubtful accounts | 760 |
If the estimate of uncollectible is made by taking 10% of gross accounts receivables, the net realizable value of accounts receivable to be reported in the
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