Jl's wholesale House uses the direct write-off method in accounting for uncollectible accounts. Record the following transactions in general journal form. Year 1 Oct 10 Sold merchandise on account to Country Kitchen, $14,500. Recelved $8,000 from Country KItchen and wrote off the remalnder owed on the sale of October 10 as uncollectible. Dec. 22 If an amount box does not require an entry, leave it blank. Page: 1 POST. DATE DESCRIPTION DEBIT CREDIT REF. 1 Oct 10 1 3 Dec. 22 4 4 5 Dec. 22 5. 6. 6. Year 2 Apr. 4 Reinstated the account of Country Kitchen that had been written off on December 22 of the previous year and recelved $6,500 cash In full séttlement. If an amount box does not require an entry, leave it blank. Page: 1 POST. DATE DESCRIPTION DEBIŤ CREDIT REF. 1 Apr. 4 2. 3 Apr. 4 4. 1. 2.
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.
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