A Accounts Payable AA Losses due to fire B Accounts Receivable BB Merchandise Inventory E Accumulated Depreciation—Equip EE Notes Payable F Allowance for Doubtful Accounts FF Payroll Tax Expense G Bad Debt Expense GG Premium on Bonds Payable H Bonds Payable HH Prepaid Insurance I Building II Prepaid Rent J Capital Lease Payable JJ Rent Expense K Cash KK Rent Revenue L Cost of Goods Sold LL Retained Earnings M Depreciation Expense MM Salaries and Wages Expense N Discount on Bonds Payable NN Salaries and Wages Payable O Dividends OO Sales Commission Expense P Equipment PP Sales Commission Payable Q Fed Income Tax Payable QQ Sales Returns R Fed Unemployment Tax Payable RR Sales Revenues S FICA Taxes Payable SS Sales Taxes Payable T Income Summary TT Service Revenue U Insurance Expense UU State Income Tax Payable V Interest Expense VV State Unemployment Tax Payable W Interest Payable WW Supplies X Interest Receivable XX Supplies Expense Y Interest Revenue YY Unearned Rent Revenue Z Land ZZ Unearned Service Revenue Example of Journal Entry: K3000D,B2000D,TT5000C Where K denotes Cash account, 3000 is the amount, D stands for debit, B denotes Accounts Receivable, 2000 is the amount, D stands for debit, TT denotes Service Revenues, 5000 is the amount, and C stands for credit. The letters are in capital. Comma is used to separate the changes in each account. Don’t use dollar sign, decimal point, or space in any place. If in an entry requires more than one debit or credit accounts, first enter debit accounts in order of dollar amount – large amount to small amount, then the credit accounts in order of dollar amount – large amount to small amount. Question: On April 1, 2020, company borrowed $50,000 from bank by signing a one-year, 6% note. The principal & interest has to be paid at the maturity of the note on March 31, 2021. On Dec. 31, 2020, company made the necessary journal entry to record accrued interest on note. Provide the journal entry that company must made on March 31, 2021 for payoff of the note.
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.
| A | Accounts Payable | AA | Losses due to fire |
| B | BB | Merchandise Inventory | |
| E | EE | Notes Payable | |
| F | Allowance for Doubtful Accounts | FF | Payroll Tax Expense |
| G | GG | Premium on Bonds Payable | |
| H | Bonds Payable | HH | Prepaid Insurance |
| I | Building | II | Prepaid Rent |
| J | Capital Lease Payable | JJ | Rent Expense |
| K | Cash | KK | Rent Revenue |
| L | Cost of Goods Sold | LL | |
| M | Depreciation Expense | MM | Salaries and Wages Expense |
| N | Discount on Bonds Payable | NN | Salaries and Wages Payable |
| O | Dividends | OO | Sales Commission Expense |
| P | Equipment | PP | Sales Commission Payable |
| Q | Fed Income Tax Payable | Sales Returns | |
| R | Fed |
RR | Sales Revenues |
| S | FICA Taxes Payable | SS | Sales Taxes Payable |
| T | Income Summary | TT | Service Revenue |
| U | Insurance Expense | UU | State Income Tax Payable |
| V | Interest Expense | VV | State Unemployment Tax Payable |
| W | Interest Payable | WW | Supplies |
| X | Interest Receivable | XX | Supplies Expense |
| Y | Interest Revenue | YY | Unearned Rent Revenue |
| Z | Land | ZZ | Unearned Service Revenue |
Example of
Where K denotes Cash account, 3000 is the amount, D stands for debit, B denotes Accounts Receivable, 2000 is the amount, D stands for debit, TT denotes Service Revenues, 5000 is the amount, and C stands for credit. The letters are in capital. Comma is used to separate the changes in each account. Don’t use dollar sign, decimal point, or space in any place. If in an entry requires more than one debit or credit accounts, first enter debit accounts in order of dollar amount – large amount to small amount, then the credit accounts in order of dollar amount – large amount to small amount.
Question: On April 1, 2020, company borrowed $50,000 from bank by signing a one-year, 6% note. The principal & interest has to be paid at the maturity of the note on March 31, 2021.
On Dec. 31, 2020, company made the necessary journal entry to record accrued interest on note. Provide the journal entry that company must made on March 31, 2021 for payoff of the note.
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