Takataka wonderers Ltd. sold goods on credit at the beginning of the year to Mr. Panda and
Question:
Takataka wonderers Ltd. sold goods on credit at the beginning of the year to Mr. Panda and Mr. Shuka costing Sh.25,000 and Sh.60,000 respectively. At the end of the year and after following all necessary procedures it became evident that the entire amount owed by My Panda will not be recovered in any near future. Of the debt owed by Mr. Shuka Sh.15,000 were bad debts as at 15 December 2018. But by the end of 30 December 2018, Mr. Shuka drew a postdated cheque of Sh.3,000 to clear an invoice included in the bad debt. Gross profit is Sh.50,000
Required:
Ledger entries
Income statement and balance sheet extracts
The trade receivable balances at the period ending 31 December 2017 was Sh.54,260. It has been established that the percentage of the defaulters is 5%. The gross profit Sh.8,520 and bad debts amount to Sh.260
Required:
The ledger entries
Extract of income statement and balance sheet
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson