Window World extended credit to customer Nile Jenkins in the amount of $135,900 for his purchase of window treatments on April 2. Terms of the sale are n/150. The cost of the purchase to Window World is $57,200. On September 4, Window World determined that Nile Jenkins's account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account. Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed. If an amount box does not require an entry, leave it blank. Apr. 2 Accounts Receivable: Jenkins Accounts Receivable: Jenkins Sales Revenue Sales Revenue To record sale, n/150 Apr. 2 Cost of Goods Sold Cost of Goods Sold Merchandise Inventory Merchandise Inventory To record cost of sale Sept. 4 Bad Debt Expense Bad Debt Expense Accounts Receivable: Jenkins Accounts Receivable: Jenkins To record bad debt Dec. 3 Accounts Receivable: Jenkins Accounts Receivable: Jenkins Bad Debt Expense Bad Debt Expense To reinstate previously written-off bad debt Dec. 3 Cash Cash Accounts Receivable: Jenkins
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.
Window World extended credit to customer Nile Jenkins in the amount of $135,900 for his purchase of window treatments on April 2. Terms of the sale are n/150. The cost of the purchase to Window World is $57,200. On September 4, Window World determined that Nile Jenkins's account was uncollectible and wrote off the debt. On December 3, Mr. Jenkins unexpectedly paid in full on his account.
Record each Window World transaction with Nile Jenkins. In order to demonstrate the write-off and then subsequent collection of an account receivable, assume in this example that Window World rarely extends credit directly, so this transaction is permitted to use the direct write-off method. Remember, however, that in most cases the direct write-off method is not allowed. If an amount box does not require an entry, leave it blank.
| Apr. 2 |
|
Accounts Receivable: Jenkins | |
|
|
Sales Revenue | Sales Revenue | |
| To record sale, n/150 | |||
| Apr. 2 |
|
Cost of Goods Sold | Cost of Goods Sold |
|
|
Merchandise Inventory | Merchandise Inventory | |
| To record cost of sale | |||
| Sept. 4 |
|
Bad Debt Expense | |
|
|
Accounts Receivable: Jenkins | Accounts Receivable: Jenkins | |
| To record bad debt | |||
| Dec. 3 |
|
Accounts Receivable: Jenkins | Accounts Receivable: Jenkins |
|
|
Bad Debt Expense | Bad Debt Expense | |
| To reinstate previously written-off bad debt | |||
| Dec. 3 |
|
Cash | Cash |
|
|
Accounts Receivable: Jenkins |
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