Question

The unearned discounts represents a loss in collections from accounts receivable, which is what percent of accounts receivable? %

Answer 1

Unearned discounts represent a percentage of accounts receivable, which can be calculated by dividing the total unearned discounts by the total accounts receivable and multiplying by 100.

Step-by-step explanation:

The concept of unearned discounts relates to the business and accounting practice where a customer takes a discount for early payment that they are not entitled to, thus reducing the amount collected on accounts receivable. To calculate the percentage loss due to unearned discounts, you need to divide the total amount of unearned discounts by the total accounts receivable and then multiply by 100 to get a percentage.

Step-by-Step Calculation

1. Identify the total amount of unearned discounts during a certain period.
2. Determine the total accounts receivable for the same period.
3. Divide the unearned discounts by the total accounts receivable.
4. Multiply the result by 100 to convert it to a percentage.

This formula will provide you with the percentage that unearned discounts represent of the accounts receivable.