So-Soft Garments Industries has started business of fabrication of men, women and Kids dresses. These dresses...

 

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So-Soft Garments Industries has started business of fabrication of men, women and Kids dresses. These dresses are directly sold to retailers to avoid profit of wholesaler and reduce prices. The merchandise is usually sold on 30 to 60 days credit terms. During its first half year of operations, the credit sales amounted to Rs. 1,360,000. During efforts of collection it was found that the credit sales amounting to Rs. 6,500 were not traceable. Therefore, these receivables were collectible as the customer has shifted to some other city and was not written off. The company is using allowance method for charging bad debt expenses. During second half of the year the credit sales amounting to Rs. 1,240,000 were achieved. Total collections during the year amounted to Rs. 2,000,000. The management is wishing to create an allowance for doubtful accounts equal to 2% of the balance accounts receivables at year end. Required Pass necessary accounting entries for writing off the accounts receivables. Create necessary allowance for the doubtful accounts at the end of accounting period. Present the accounts receivables in the balance sheet at end of the year. 1) 2) 3) So-Soft Garments Industries has started business of fabrication of men, women and Kids dresses. These dresses are directly sold to retailers to avoid profit of wholesaler and reduce prices. The merchandise is usually sold on 30 to 60 days credit terms. During its first half year of operations, the credit sales amounted to Rs. 1,360,000. During efforts of collection it was found that the credit sales amounting to Rs. 6,500 were not traceable. Therefore, these receivables were collectible as the customer has shifted to some other city and was not written off. The company is using allowance method for charging bad debt expenses. During second half of the year the credit sales amounting to Rs. 1,240,000 were achieved. Total collections during the year amounted to Rs. 2,000,000. The management is wishing to create an allowance for doubtful accounts equal to 2% of the balance accounts receivables at year end. Required Pass necessary accounting entries for writing off the accounts receivables. Create necessary allowance for the doubtful accounts at the end of accounting period. Present the accounts receivables in the balance sheet at end of the year. 1) 2) 3)

Answer rating: 100% (QA)

ANSWER 1 Pass necessary accounting entries for writing off the accounts receivables Debit Credit Acc... View the full answer