You are to show the journal entries necessary to record the following items: a. 2018 April 1 Bought a van on credit from Deedon Garage for Ksh.5, 395,000. b. 2018 April 3 A debt of Ksh.81, 000 owing from P Knight was written off as a bad debt. c. 2018 April 8 Office furniture bought by us for Ksh.610, 000 was returned to the supplier Timewas Ltd, as it was unsuitable. Full allowance will be given to us. d. 2018 April 12 We are owed Ksh.320, 000 by R Twig. He is declared bankrupt and we received Ksh.51, 000 in full settlement of the debt. e. 2018 April 14 We take goods costing Ksh.22, 000 out of the business stock without paying for them. f. 2018 April 28 Some time ago we paid an insurance bill thinking that it was all in respect of the business. We now discover that Ksh.62, 000 of the amount paid was in fact insurance of our private house. g. 2018 April 28 Bought machinery for Ksh.1, 260,000 on credit from Electrotime Ltd.
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.
You are to show the
a. 2018 April 1 Bought a van on credit from Deedon Garage for Ksh.5, 395,000.
b. 2018 April 3 A debt of Ksh.81, 000 owing from P Knight was written off as a
c. 2018 April 8 Office furniture bought by us for Ksh.610, 000 was returned to the supplier Timewas Ltd, as it was unsuitable. Full allowance will be given to us.
d. 2018 April 12 We are owed Ksh.320, 000 by R Twig. He is declared bankrupt and we received Ksh.51, 000 in full settlement of the debt.
e. 2018 April 14 We take goods costing Ksh.22, 000 out of the business stock without paying for them.
f. 2018 April 28 Some time ago we paid an insurance bill thinking that it was all in respect of the business. We now discover that Ksh.62, 000 of the amount paid was in fact insurance of our private house.
g. 2018 April 28 Bought machinery for Ksh.1, 260,000 on credit from Electrotime Ltd.
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