You are required to prepare the receivables ledger control account for the month of June, showing the balance as at 30 June 20X5.
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.
Jones, a company, prepares monthly Receivables and Payables ledger control accounts. At 1 June 20X5 the following balances existed in the company's records.
Receivables ledger balances Dr $ 54,000
Payables ledger balances CR $ 43,000
During the month of June, the transactions of Jones included the
|
|
$ |
|
Credit sales • |
251,000 |
|
Cash sales |
-34,000 |
|
Credit sales returns |
11,000 |
|
Amounts received from credit customers • |
242,000 |
|
Dishonoured cheques • |
500 |
|
Cash discounts allowed |
|
|
Irrecoverable debts written off |
3,000 |
|
Increase in allowance for receivables |
1,000 |
|
Interest charged to customers |
1,200 - 1,400 |
|
Contras between receivables and payables |
-800 |
You are required to prepare the receivables ledger control account for the month of June, showing the balance as at 30 June 20X5.
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