The following balances have been taken from the pre-closing Trial Balance prepared from the ledger of Telco Corporation on Dec. 31,2018. DEBIT BALANCE CREDIT BALANCE Cash Rs. 82,000 Account Payable 34,050 Account Receivables (1,1,2018) 200,000 Sales 510,000 Merchandise Inventory (1,1,2018) 105,000 Purchases return 15,000 Office Supplies 7,500 Unearned fee 15,000 Furniture 75,000 Bazil-Capital 210,000 Purchases 300,000 Salaries Expanses 5,250 Prepaid Insurance 3,000 Rent Expenses 6,300 Total 784,050 Total 784,050 Merchandise Inventory on Dec.31,2018 Rs. 120,000. DATA FOR ADJUSTMENTS: Insurance expired by Rs. 2,250. Fee earned Rs. 10,500. Depreciation expenses on furniture Rs. 7,500. Salaries expanses for the year Rs. 6,300. Rent expense for the year Rs. 5,250. Office supplies on hand Rs. 3,000. Accounts receivables of Rs. 10,000 were wrongly recorded into cash. Bad debts were estimated 4% of Accounts Receivables. Required: Pass the necessary adjusting entries for the year ended Dec. 31,2018. Prepare the adjusted trial balance for Telco Corp.. As of Dec 31,2018. Prepare Income Statement for the year ended Dec. 31,2018.
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.
The following balances have been taken from the pre-closing
|
DEBIT BALANCE |
CREDIT BALANCE |
||
|
Cash Rs. |
82,000 |
Account Payable |
34,050 |
|
Account Receivables (1,1,2018) |
200,000 |
Sales |
510,000 |
|
Merchandise Inventory (1,1,2018) |
105,000 |
Purchases return |
15,000 |
|
Office Supplies |
7,500 |
Unearned fee |
15,000 |
|
Furniture |
75,000 |
Bazil-Capital |
210,000 |
|
Purchases |
300,000 |
|
|
|
Salaries Expanses |
5,250 |
|
|
|
Prepaid Insurance |
3,000 |
|
|
|
Rent Expenses |
6,300 |
|
|
|
Total |
784,050 |
Total |
784,050 |
Merchandise Inventory on Dec.31,2018 Rs. 120,000.
DATA FOR ADJUSTMENTS:
- Insurance expired by Rs. 2,250.
- Fee earned Rs. 10,500.
Depreciation expenses on furniture Rs. 7,500.- Salaries expanses for the year Rs. 6,300.
- Rent expense for the year Rs. 5,250.
- Office supplies on hand Rs. 3,000.
- Accounts receivables of Rs. 10,000 were wrongly recorded into cash.
Bad debts were estimated 4% of Accounts Receivables.
Required:
- Pass the necessary
adjusting entries for the year ended Dec. 31,2018. - Prepare the adjusted trial balance for Telco Corp.. As of Dec 31,2018.
- Prepare Income Statement for the year ended Dec. 31,2018.
- Prepare classified balance Sheet as of Dec. 31,2018.
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