January, Lily Bhd sold goods at a quoted price of RM10,000 with a credit term of 2/10, net 90. Show the journal entries and amount to be measured in the receivables account; i)When cash discount of 2% is to be applied. ii)At initial measurement iii)During the year, a customer of Lily Bhd was deemed uncollectable. Give examples of any five situations where a debtor can be declared as Uncollectable Receivables.
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.
In January, Lily Bhd sold goods at a quoted price of RM10,000 with a credit term of 2/10, net 90. Show the
i)When cash discount of 2% is to be applied.
ii)At initial measurement
iii)During the year, a customer of Lily Bhd was deemed uncollectable. Give examples of any five situations where a debtor can be declared as Uncollectable Receivables.
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