On 1st Jan 2020 Suntop LLC has Opening accounts receivable for RO 8000. During the year 2020 amount received from receivables was RO 13500. In the amount collected from receivables RO 7600 was related to sales made in 2019. The Closing accounts receivables on 31Dec 2020 was RO 9000. The company management decided to make allowance for doubtful debts in 2020 based on the past experience. In the year 2021 The amount of uncollectables was RO 300 and the closing accounts receivable is RO 12000. The company wants to keep the same percentage of allowance as in 2020. Required: Draw the accounting entries for Accounts receivables
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.
On 1st Jan 2020 Suntop LLC has Opening
Required:
Draw the accounting entries for Accounts receivables
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