From inceptions of operations, an entity provided for doubtful accounts under the allowance method and provisions were made monthly at 2% of credit sales. No year-end adjustments to the allowance account were made. The balance in the allowance for doubtful accounts was 1,000,000 on January 1, 2019. During 2019, credit sales totaled P20,000,000 interim provisions for doubtful accounts were made at 2% of credit sales, P200,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P50,000. An aging was made on December 31, 2019. Balance Uncollectible Classification November — December 6,000,000 10% July — October 2,000,000 20% January—June 1,500,000 30% Prior to January 1, 2019 500,000 50% Based on the review of collectability of the account balances in the "prior to January 1, 2019" aging category, additional accounts totaling P100,000 are to be written off on December 31, 2019. Effective December 31, 2019, the entity adopted aging method for estimating the allowance for doubtful accounts. What amount should be reported as doubtful accounts expense 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.
From inceptions of operations, an entity provided for doubtful accounts under the allowance method and provisions were made monthly at 2% of credit sales. No year-end adjustments to the allowance account were made. The balance in the allowance for doubtful accounts was 1,000,000 on January 1, 2019. During 2019, credit sales totaled P20,000,000 interim provisions for doubtful accounts were made at 2% of credit sales, P200,000 of
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