ρUESTION3 1. The ledger of Yasmeen Lumber Supply on 31 July 2021 includes the selected accounts before adjusting entries have been prepared. Debit Credit Notes payable 10,000 Supplies 12,000 Prepaid rent 1,800 Buildings 125,000 Accumulated depreciation - Buildings 70,000 Unearned service revenue 5,750 An analysis of the company's accounts shows the following: a) The notes payable pays interest at a rate of 6% per year. b) Supplies on hand at the end of the month totalled RM9,300. c) The balance in prepaid rent represents 4 months of rent costs. d) Employees were owned RM1,550 related to unpaid salaries and wages. e) Depreciation on buildings is RM3,000 per year. f) During the month, the company satisfied obligations worth RM2,350 related to unearned service revenue. g) Unpaid maintenance and repairs costs were RM1,150. Required: Prepare the adjusting entries at 31 July assuming that adjusting entries are made monthly. Use additional accounts as needed.
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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