On 31st August 2021, Rossy Enterprise had a RM155,000 debit balance in Accounts Receivable and a RM6,200 credit balance in Allowance for Doubtful debt. During September 2021, Rossy made the following transactions: Sept 1 : Sales on account, RM590,000. Sept 10: Collection from receivables through online banking, RM627,000. Sept 20: Write-offs of uncollectible receivables, RM7,000. Sept 30: Bad debt was estimated at 3% of the month’s credit sales. Required: 1) Journalize all September transactions using the allowance method. Post the entries to Accounts Receivable, Allowance for Doubtful Debt, and Bad Debt Expense. You need to balance off the ledgers and show their balances on 30th September 2021. 2) Show the amount of net accounts receivable would Rossy report in its statement of financial position as at 30 September 2021. Is the amount being realistic? Give your reason.
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.
On 31st August 2021, Rossy Enterprise had a RM155,000 debit balance in
Sept 1 : Sales on account, RM590,000.
Sept 10: Collection from receivables through online banking, RM627,000.
Sept 20: Write-offs of uncollectible receivables, RM7,000.
Sept 30:
Required:
1) Journalize all September transactions using the allowance method.
2) Show the amount of net accounts receivable would Rossy report in its
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