Following information with ABC Ltd. A/C Receivable Ending Beginning Rs. 50000 Allowance for Bad debts Beginning Rs.5000 Credit Sales during the year Rs.100000 Cash Collections during the year Rs.60000 Accounts receivable written off Rs.4000 Recovered previously written off account Rs.3000 At year end, Company analyzed that 2% will remain uncollectible from 70% of Receivables and 10% will remain uncollectible from remaining Receivables. Required: Prepare Entries in General Journal for the above transactions including adjusting entry.
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.
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