K.K. Menasha is in business as a trader. A trial balance taken out as on 31st January, 2006, was as follows: GH¢ GH¢ Purchases 84,000 Sales 100,480 Return inwards& outwards 272 696 Salaries & wages 8,200 Rent & rates 1,720 Sundry Expenses 1,500 Bad Debts 268 Provision for bad debts-1st Feb. 2005 560 Stock on hand-1st Feb. 2005 27,260 Fixtures & Fittings: -1st February, 2005 2,800 -Additions on 30th September, 2005 480 Motor Vehicle: -1st February, 2005 1,840 -Sales of vehicle (NBV 1/2/05, ¢160) 240 Sundry Debtors & Creditors 9,220 7,704 Cash at Bank & in hand 7,640 Capital Account 41,520 Drawings Account 5,200 _______ 151,200 151,200 You are required to prepare Statement of Profit or Loss for the year ended 31st January 2006, and draw up a Statement of Position as at that date. The following information is to be taken into account. Outstanding amounts not entered in the books were: Rent ¢72, sundry expenses ¢180. Prepayments were: Rates ¢120, Insurance ¢20 Stock on hand on 31st January 2006 was valued at ¢30,900. Provision for doubtful debts is to be ¢680
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.
- K.K. Menasha is in business as a trader. A
trial balance taken out as on 31st January, 2006, was as follows:
GH¢ GH¢
Purchases 84,000
Sales 100,480
Return inwards& outwards 272 696
Salaries & wages 8,200
Rent & rates 1,720
Sundry Expenses 1,500
Provision for bad debts-1st Feb. 2005 560
Stock on hand-1st Feb. 2005 27,260
Fixtures & Fittings:
-1st February, 2005 2,800
-Additions on 30th September, 2005 480
Motor Vehicle:
-1st February, 2005 1,840
-Sales of vehicle (NBV 1/2/05, ¢160) 240
Sundry Debtors & Creditors 9,220 7,704
Cash at Bank & in hand 7,640
Capital Account 41,520
Drawings Account 5,200 _______
151,200 151,200
You are required to prepare Statement of Profit or Loss for the year ended 31st January 2006, and draw up a Statement of Position as at that date.
The following information is to be taken into account.
- Outstanding amounts not entered in the books were: Rent ¢72, sundry expenses ¢180.
- Prepayments were: Rates ¢120, Insurance ¢20
- Stock on hand on 31st January 2006 was valued at ¢30,900.
- Provision for doubtful debts is to be ¢680
Depreciation is to be charged as follows: Fixtures and Fittings, 10% p.a; Motor Vehicles 25% p.a.
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