1. Agogo Trading has the following account balances as at 30 June 2019. Account Receivable Provision for doubtful debt RM 200.000 6.000 On 30 June 2019, the following adjustment have to be made: i. Debts of RM500 are to be written off as bad i. One of the entities with accounts receivable whose debts had previously been written off as bad sent a cheque for RM1,000 in full settlement of the amount owed i. Provision for doubtful debts is 2% of the outstanding accounts receivables Required: For the year ending 30 June 2019 show the: a) Provision for doubtful debts account b) Statement of Profit or Loss (extract) c) Statement of Financial Position (extract)
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.
Chapter : Receivables Accounting System
Step by step
Solved in 2 steps with 1 images
