The following information was taken from the books of Big Boy Traders. Most of the sales take place on credit. Debtors are given credit terms of 30 days. The business does not expect to award any settlement discounts. All settlement discounts are therefore incidental in nature. Additional information: The incomplete Debtors Control account for the month of March 2019 has been provided to you below. You have also been provided with a Debtors list. This list reflects all amounts owing by the debtors at 31 March 2019. The following errors/omissions were noted: The total of the Debtors Journal was over‐cast by R 150. A return of goods by D. Dagwood for R 870 including VAT was correctly recorded in the journal but posted to the account of E. Egghead. An invoice issued to D. Dagwood for R 4 200 has been posted to the wrong side of his personal account. No entry has been made for a cheque for R 1 500 which was returned by the bank due to insufficient funds. The cheque was originally received from A. Apples in settlement of an account for R 1 750. A credit note issued to A. Apples for R 540 has been incorrectly entered in her personal account as R 450. Goods sold on credit to E. Egghead for R 1 870 including VAT have been incorrectly entered in the Debtors Journal as a sale to D. Dagwood and posted as such. SEE attatched 12.JPG Prepare a corrected Debtors Control account using the information provided above. (Note: The opening balance of R 10 000 is incorrect. SEE attatched 13.JPG (answer format)
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 information was taken from the books of Big Boy Traders. Most of the sales take place on credit. Debtors are given credit terms of 30 days. The business does not expect to award any settlement discounts. All settlement discounts are therefore incidental in nature.
Additional information:
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The incomplete Debtors Control account for the month of March 2019 has been provided to you below.
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You have also been provided with a Debtors list. This list reflects all amounts owing by the debtors at 31 March 2019.
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The following errors/omissions were noted:
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The total of the Debtors Journal was over‐cast by R 150.
-
A return of goods by D. Dagwood for R 870 including VAT was correctly recorded in the journal but posted to the account of E. Egghead.
-
An invoice issued to D. Dagwood for R 4 200 has been posted to the wrong side of his personal account.
-
No entry has been made for a cheque for R 1 500 which was returned by the bank due to insufficient funds. The cheque was originally received from A. Apples in settlement of an account for R 1 750.
-
A credit note issued to A. Apples for R 540 has been incorrectly entered in her personal account as R 450.
-
Goods sold on credit to E. Egghead for R 1 870 including VAT have been incorrectly entered in the Debtors Journal as a sale to D. Dagwood and posted as such.
SEE attatched 12.JPG
Prepare a corrected Debtors Control account using the information provided above.
(Note: The opening balance of R 10 000 is incorrect.SEE attatched 13.JPG (answer format)
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Debtors control(D/C) account: It is simply a ledger account which tracks the amounts that the company owe. The balance of this account says the total amount the customers have to pay.
Whenever an invoice is raised, such amount is added to the ledger. And when it is paid by customer, it will be reduced.
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