On 30 June, the end of its financial year, Aarav Ltd completed an age analysis of its accounts receivable and determined that an allowance for doubtful debts of $12 320 was needed in order to report accounts receivable at their estimated collectable amount in the Balance Sheet. Required (a) Prepare the general journal entry to record bad debts expense assuming that the Allowance for Doubtful Debts account currently has a $1940 credit balance (narration not required). (b) Prepare an entry to write off an account receivable from V. Vijay for $781 (narration not required). (c) From the following information, determine the amount of cash received from customers during 2019-20: Accounts receivable (30-Jun-2019) $81 000 Accounts receivable (30-Jun-2020) $76 000 Sales (Credit) $350 000 (d) From the following information, determine the amount of purchases for the year: Beginning inventory $ 60 000 Ending inventory 90 000 Cost of sales 130 000 (e) If wages expense for the year is $480 000, wages accrued at the beginning of the period are $15 600 and wages accrued at the end of the period are $18 200 what amount for “wages paid” will appear in the statement of cash flows?
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.
Question 6
On 30 June, the end of its financial year, Aarav Ltd completed an age analysis of its
was needed in order to report accounts receivable at their estimated collectable
amount in the Balance Sheet.
Required
(a) Prepare the general
Allowance for Doubtful Debts account currently has a $1940 credit balance
(narration not required).
(b) Prepare an entry to write off an account receivable from V. Vijay for $781
(narration not required).
(c) From the following information, determine the amount of cash received from
customers during 2019-20:
Accounts receivable (30-Jun-2019) $81 000
Accounts receivable (30-Jun-2020) $76 000
Sales (Credit) $350 000
(d) From the following information, determine the amount of purchases for the year:
Beginning inventory $ 60 000
Ending inventory 90 000
Cost of sales 130 000
(e) If wages expense for the year is $480 000, wages accrued at the beginning of the
period are $15 600 and wages accrued at the end of the period are $18 200 what
amount for “wages paid” will appear in the statement of cash flows?
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