question : The following information has been taken from the books of Cristiano on December 31, 2020. Account Receivable on 1.1.2020 is 125,000 Allowance for Bad debts on 1.1.2020 is 1,200 Sales is 1,760,000 Sales return and allowance is 35,000 Cash Collection from customers is 1,215,000 Customers’ accounts written off amount is 50,000 Previously written off accounts recovered is 2,200 Bad debts expenses are estimated to be 5% of net sales. Required: Pass journal entries to record the above transactions.
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.
question :
The following information has been taken from the books of Cristiano on December 31, 2020.
Account Receivable on 1.1.2020 is 125,000- Allowance for
Bad debts on 1.1.2020 is 1,200 - Sales is 1,760,000
- Sales return and allowance is 35,000
- Cash Collection from customers is 1,215,000
- Customers’ accounts written off amount is 50,000
- Previously written off accounts recovered is 2,200
- Bad debts expenses are estimated to be 5% of net sales.
Required:
- Pass
journal entries to record the above transactions.
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