Task 1: Ms. Shafiya is accounting manager of Salalah Cement factory, having Ms. Shafiya wishes to explain about accounts receivable accounting to his accounting executives and expect you to understand the following relating to accounts receivable and prepare necessary journal entries and accounting treatment for the year ended 31s December 2021. The company sells goods on RO 50000 for cash and RO 30000 on credit basis to various customers in the company. The company has received RO 5000 towards credit sales and the rest is receivable according to the terms of the business transaction. • Later, the company has not received any money out of the rest of the credit sales and decided to estimate the bad and doubtful debts at 2% of the total credit sales. The company had allowance for bad and doubtful debts (credit balance) RO 3000. (a) (b) Explain the concept of bad debts, allowance for doubtful debts and bills receivable Prepare journal entries and show how it will appear in income statement and balance sheet.
Task 1: Ms. Shafiya is accounting manager of Salalah Cement factory, having Ms. Shafiya wishes to explain about accounts receivable accounting to his accounting executives and expect you to understand the following relating to accounts receivable and prepare necessary journal entries and accounting treatment for the year ended 31s December 2021. The company sells goods on RO 50000 for cash and RO 30000 on credit basis to various customers in the company. The company has received RO 5000 towards credit sales and the rest is receivable according to the terms of the business transaction. • Later, the company has not received any money out of the rest of the credit sales and decided to estimate the bad and doubtful debts at 2% of the total credit sales. The company had allowance for bad and doubtful debts (credit balance) RO 3000. (a) (b) Explain the concept of bad debts, allowance for doubtful debts and bills receivable Prepare journal entries and show how it will appear in income statement and balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Task 1:
Ms. Shafiya is accounting manager of Salalah Cement factory, having Ms. Shafiya wishes to
explain about accounts receivable accounting to his accounting executives and expect you to
understand the following relating to accounts receivable and prepare necessary journal entries and
accounting treatment for the year ended 31s December 2021.
The company sells goods on RO 50000 for cash and RO 30000 on credit basis to various
customers in the company. The company has received RO 5000 towards credit sales and
the rest is receivable according to the terms of the business transaction.
• Later, the company has not received any money out of the rest of the credit sales and
decided to estimate the bad and doubtful debts at 2% of the total credit sales. The company
had allowance for bad and doubtful debts (credit balance) RO 3000.
(a)
(b)
Explain the concept of bad debts, allowance for doubtful debts and bills receivable
Prepare journal entries and show how it will appear in income statement and balance
sheet.
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