At December 31, 2024, Bacardi Company had $500,000 in Accounts Receivable and $20,000 in the Allowance for Doubtful Accounts. All sales made by Bacardi are on account. During 2025, Bacardi recorded the following transactions: $2,000,000 in sales; $2,100,000 collected from customers; $27,000 in accounts were written off as uncollectible; and bad debt expense for the year ended December 31, 2025 was $31,000. When preparing their December 31, 2025 balance sheet, the amount Bacardi Company would report as net accounts receivable is: $373,000 $400,000 $349,000 $369,000
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 December 31, 2024, Bacardi Company had $500,000 in Accounts Receivable and
$20,000 in the Allowance for Doubtful Accounts. All sales made by Bacardi are on
account. During 2025, Bacardi recorded the following transactions: $2,000,000 in
sales; $2,100,000 collected from customers; $27,000 in accounts were written off as
uncollectible; and
$31,000. When preparing their December 31, 2025
Bacardi Company would report as net accounts receivable is:
$373,000
$400,000
$349,000
$369,000
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