The following information was taken from the books of Big Boy Traders. Most of the sales take place on credit. Debtors are given credit terms of 30 days. The business does not expect to award any settlement discounts. All settlement discounts are therefore incidental in nature. Additional information: 1. The incomplete Debtors Control account for the month of March 2019 has been provided to you below. 2. You have also been provided with a Debtors list. This list reflects all amounts owing by the debtors at 31 March 2019. 3. The following errors/omissions were noted: The total of the Debtors Journal was over‐cast by R 150. A return of goods by D. Dagwood for R 870 including VAT was correctly recorded in the journal but posted to the account of E. Egghead. An invoice issued to D. Dagwood for R 4 200 has been posted to the wrong side of his personal account. No entry has been made for a cheque for R 1 500 which was returned by the bank due to insufficient funds. The cheque was originally received from A. Apples in settlement of an account for R 1 750. A credit note issued to A. Apples for R 540 has been incorrectly entered in her personal account as R 450. Goods sold on credit to E. Egghead for R 1 870 including VAT have been incorrectly entered in the Debtors Journal as a sale to D. Dagwood and posted as such. General Ledger of Big Boy Traders Statement of financial position accounts section Dr Debtors Control Cr Date Details Fol. Amount Date Details Fol. Amount 2019 March 1 Balance b/d 10 000 2019 March 31 Bank 20 000 Sales and VAT 35 000 Sales and VAT 450 Sales returns and VAT 2 400 Bank (R/D) 430 Interest Income 20 Credit Losses and VAT 250 Debtors List as at 31 March 2019 Debtor Pre‐adjusted Balance(R) A. Apples 5 400 D. Dagwood 8 600 E. Egghead (690)Cr F. Fudge 2 200 Required: Prepare a corrected debtors list. (Show all workings PLEASE)
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.
The following information was taken from the books of Big Boy Traders. Most of the
sales take place on credit. Debtors are given credit terms of 30 days. The business
does not expect to award any settlement discounts. All settlement discounts are
therefore incidental in nature.
Additional information:
1. The incomplete Debtors Control account for the month of March 2019 has
been provided to you below.
2. You have also been provided with a Debtors list. This list reflects all amounts
owing by the debtors at 31 March 2019.
3. The following errors/omissions were noted:
The total of the Debtors Journal was over‐cast by R 150.
A return of goods by D. Dagwood for R 870 including VAT was correctly
recorded in the journal but posted to the account of E. Egghead.
An invoice issued to D. Dagwood for R 4 200 has been posted to the
wrong side of his personal account.
No entry has been made for a cheque for R 1 500 which was returned
by the bank due to insufficient funds. The cheque was originally
received from A. Apples in settlement of an account for R 1 750.
A credit note issued to A. Apples for R 540 has been incorrectly entered
in her personal account as R 450.
Goods sold on credit to E. Egghead for R 1 870 including VAT have been
incorrectly entered in the Debtors Journal as a sale to D. Dagwood and
posted as such.
General Ledger of Big Boy Traders
Statement of financial position accounts section
Dr Debtors Control Cr
Date Details Fol. Amount Date Details Fol. Amount
2019
March
1
Balance b/d 10 000 2019
March
31
Bank 20 000
Sales and
VAT
35 000 Sales and VAT 450
Sales
returns
and VAT
2 400 Bank (R/D) 430
Interest
Income
20 Credit Losses
and VAT
250
Debtors List as at 31 March 2019
Debtor Pre‐adjusted Balance(R)
A. Apples 5 400
D. Dagwood 8 600
E. Egghead (690)Cr
F. Fudge 2 200
Required:
Prepare a corrected debtors list.
(Show all workings PLEASE)
Debtors are persons to whom we owe on account of credit sales done to them. Essentially, they are the ones who owe us money since we had sold them goods on account as opposed to against cash
Based on information available, we can make adjustment to individual debtors as given below :
| Particulars | Amount |
| A. Apples | |
| Incorrect balance | 5,400 |
| Add: Cheque returned | 1,750 |
| Less: Credit note issued | -540 |
| Adjusted Balance | 6,610 |
| D. Dagwood | |
| Incorrect balance | 8,600 |
| Add: Posted to wrong side | 8,400 |
| Less: Incorrect posting | -1,870 |
| Less: Goods returned | -870 |
| Adjusted Balance | 14,260 |
| E. Eaghead | |
| Incorrect balance | -690 |
| Add: Wrongly posted | 870 |
| Less: Goods sold but not posted | 1,870 |
| Adjusted Balance | 2,050 |
There is no adjustment required in 4th debtor's account (F. Fudge)
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