Embed Size (px)
Citation preview
ACCOUNTS CASE STUDY 5-1(A)
PRESENTED BY :SAKSHIKHURANA(93
1)SURYA PRABHA (949)
In Dec31,2006,the co. reviewed certain transaction applicable to account receivable which are as follows:-
Sales during 2006 amounted to $99,65,575 Payment received during 2006 - $96,85,420 During the year. A/C rec. totaling $26854 were w/o. Two account w/o in2005 were collected in 2006a) One account for 2108 was paid in fullb) Partial payment of 1566 was made by Hollowell
co.and the original amount was 2486 Allowance for bad debt to was adjusted as 3% of the
balance in account receivable at the end of the year
LIABILITIES AMOUNT($)
ASSETS AMOUNT($)
Current Liabilities Current Assets
Account Payable 510,000 Cash 671,344
Taxes payable 709,354 A/C Receivable 988,257 Less: Allowance for doubtful A/C 29,648
958,609
Accrued salaries 141,478 U.S. Securities 274,060
Long- term debt due in 1 yr 69,300 Inventories 1,734,405
Other assets
Noncurrent liabilities : Investments 412,294
Long –term debt
1,247,368 Land 186,563
Shareholders’equity : Building 2,405,259 Less: Accumulated depreciation 663,379
1,741,880
Common stock 2,503,275 Factory machinery 3,425,585 Less : Accumulated depreciation 1,642,358
1,783,227
Retained earnings 2,851,096 Furniture and fixtures 56,484 Less: Accumulated depreciation 40,400
16,084
Automotive equipment 58,298 Less : Accumulated depreciation 37,156
21,142
Office machines 42,534 Less : Accumulated depreciation 28,005
14,529
Tools 61,294
Patent 56,250
Prepaid expenses 100,190
8,031,871 8,031,871
Sno
Particulars L.F.
Amount(dr.) $
Amount(cr.) $
1 Account receivable A/C Dr
9965575
To Sales A/C(For Sales on Credit)
9965575
2 Cash Account Dr
9685420
To Account receivable A/C(For payment received)
9685420
3 Allowance for Bad Debts A/c Dr
26854
To Accounts receivables A/c(For bad debts written off)
26854
4 (a)
Cash A/C Dr
2108
To Allowance for Bad Debts A/C(For bad debts recovered)
2108
(b)
Cash A/C Dr
1566
To Allowance for Bad Debts A/C
1566
5 Bad Debts A/c Dr
30695
To Allowance for Bad Debts A/c
30695
Sno
Particulars J.F Amt($) Sno.
Particulars J.F. Amt($)
1 To Bal b/d 958,609 1 By cash A /C 9685420
2 To Sales A/C 9965575 2 By bal c/d 1,238,764
10924184
10924184
Dr Cr.
Sno
Particulars J.F. Amt($) Sno
Particulars J.F. Amt($)
1 To Accounts Rec.
26854 1 By bal b/d 29648
.To bal c/d 37163 2 By Cash A/c 2108
4 By Cash A/c 1566
5 By Bad debt A/c
30695
64017 64017
Dr Cr.
Accounts Receivables = $1,238,764 Allowance for Bad Debts 3% of accounts Receivables = $37163
Bad debts $26854Add: New Allowance (3% of 1,238,764) $37163 $64017Less: Old Allowance $29648 $34369 Less: Cash recd from bad debts w/o $ 3674Therefore allowance for Bad Debts A/c = $30695
Accounts Receivables = $1,238,784
Less : Allowance for Bad Debts A/c = $ 37163Net Accounts Rec. $ 1201621
Therefore Total Current assets = $3881430
Quick ratio – current assets - inventory current liabilities $3881430 – $1734405 $1430132 =1.5:1
Days Receivables – Receivables Sales /365
1201621 9965575/365
= 44 Days
Average Collection period from debtors is 44 days
THANK YOU
