Journal Practice question 3

11.abc  company made 5% allowance on its receivable based on past experiences.the journal  entry will be

Debit	bad debt accounts
Credit	receivable allowance

Rules & calculation for receivable allowance

*john Stamp has opening balances at 1 January 2016 on his trade receivables account and allowance for receivables account of $68,000 and $3,400 respectively. During the year to 31 December 2016 John Stamp makes credit sales of $354,000 and receives cash from his receivables of $340,000.

FA1 Practice question set 6

1.rafe & Co have total accounts receivable at the end of their accounting period of $45,000. Of these it is discovered that one, Mr Xiun who owes $790, has been declared bankrupt, and another who gave his name as Mr Jones has totally disappeared owing Araf & Co $1,240.

The provision of credit facilities

The majority of businesses will sell to their customers on credit and state a defined time within which they must pay (a credit period). 

The main benefits and costs of doing so are as follows:

The Allowance for Doubtful Accounts

Allowance

1.The allowance for doubtful accounts is a reduction of the total amount of accounts receivable appearing on a company’s balance sheet, and is listed as a deduction immediately below the accounts receivable line item

2.The allowance for doubtful accounts represents management’s best estimate of the amount of accounts receivable that will not be paid by customers. 

What is 'Accounting' and 'accountant'

What is an 'Accountant'

An accountant is a professional person who performs accounting functions such as

audits or financial statement analysis .

Accountants can either  be employed with an accounting firm, a large company with an internal accounting department, or can set up an individual practice