Minnie has asked you to review the methods Min Armin Wastege uses when dealing with Accounts Receivable. Minnie has compiled the following information for the past 2 months and wants you to update her records on August 31, 2020. On June 30, 2020 the Account Receivable balance for Min Armin Wastege was $13,585 Dr with an Allowance for Doubtful Debts of $462 Cr. In the last two months Sales (net of GST) S4 800 Sales Returns & Allowances (net of GST) 400 Cash Collected 3 550 Bad Debts to be written off (Including GST) 660 The bad debts listed above have not been written off as yet. Minnie has also calculated based on past experience that 7% of net credit sales go bad. All sales are made on credit. REQUIRED: Prepare the following General Journal entries to 1. account for the write off of the bad debt during the past two months 2. the adjusting entry on August 31 using the information Minnie has provided. b. Update the Accounts Receivable and Allowance for doubtful debts accounts.
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.
Minnie has asked you to review the methods Min Armin Wastege uses when dealing with
wants you to update her records on August 31, 2020.
On June 30, 2020 the Account Receivable balance for Min Armin Wastege was $13,585 Dr with
an Allowance for Doubtful Debts of $462 Cr. In the last two months
Sales (net of GST)
S4 800
Sales Returns & Allowances (net of GST) 400
Cash Collected
3 550
The bad debts listed above have not been written off as yet. Minnie has also calculated based on past experience that 7% of net credit sales go bad. All sales are made on credit.
REQUIRED:
Prepare the following General
1. account for the write off of the bad debt during the past two months
2. the
b. Update the Accounts Receivable and Allowance for doubtful debts accounts.
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