The financial statements of Panta Company included the following information: January 1, 2020 December 31, 2020 Accounts Receivable 1,200,000 Allowance for doubtful accounts 60,000 Sales 8,000,000 Cash collected from customers 7,000,000 The cash collections included a recovery of P10,000 from a customer whose account had been written off as worthless in 2019. During 2020, it was necessary to recognize doubtful accounts expense of P100,000 and write off worthless customers’ accounts of P30,000. On December 1, 2020, a customer settled an account of P30,000. On December 1, 2020, a customer settled an account by issuing a 12%, six-month note for P400,000. What is the net realizable value of accounts receivable on December 31, 2020?
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.
The financial statements of Panta Company included the following information:
January 1, 2020 December 31, 2020
Accounts Receivable 1,200,000
Allowance for doubtful accounts 60,000
Sales 8,000,000
Cash collected from customers 7,000,000
The cash collections included a recovery of P10,000 from a customer whose account had been written off as worthless in 2019. During 2020, it was necessary to recognize doubtful accounts expense of P100,000 and write off worthless customers’ accounts of P30,000. On December 1, 2020, a customer settled an account of P30,000. On December 1, 2020, a customer settled an account by issuing a 12%, six-month note for P400,000.
What is the net realizable value of accounts receivable on December 31, 2020?
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