ZXC Company recorded uncollectible accounts expense of $20,000 during 2021. The allowance for uncollectible accounts had a balance of $17,500 on December 31, 2019. During the year 2020, ZXC wrote off $30,500 of uncollectible receivables and recovered $8,050 of uncollectible accounts written off in previous years. How much will be the allowance for uncollectible accounts on December 31, 2021?
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.
ZXC Company recorded uncollectible accounts expense of $20,000 during 2021. The allowance for uncollectible accounts had a balance of $17,500 on December 31, 2019. During the year 2020, ZXC wrote off $30,500 of uncollectible receivables and recovered $8,050 of uncollectible accounts written off in previous years. How much will be the allowance for uncollectible accounts on December 31, 2021?
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