On May 10, the company purchased goods from Fox Company for $74,900, terms 2/10, n/30. Purchases and accounts payable are recorded at net amounts. The invoice was paid on May 18. On June 1, the company purchased equipment for $96,000 from Rao Company, paying $31,200 in cash and giving a one- year, 9% note for the balance. 1. 2. On September 30, the company discounted at 11% its $220,000, one-year zero-interest-bearing note at Virginia State Bank, receiving $198,000. 3. (a) Prepare the journal entries necessary to record the transactions above using appropriate dates. Company uses the periodic inventory system. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
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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