credit sale 4000 has not been recorded - what is the treatment of final accounts. please explain your answer
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Answer:
credit sale 4000 has not been recorded:
Credit Sales
Customer purchases to be paid at a later date
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What are Credit Sales?
Credit sales refer to a sale in which the amount owed will be paid at a later date. In other words, credit sales are purchases made by customers who do not render payment in full, in cash, at the time of purchase. To learn more, check out CFI’s Credit Analyst Certification program.
Types of Sales Transactions
There are three main types of sales transactions: cash sales, credit sales, and advance payment sales. The difference between these sales transactions simply lies in the timing of when cash is received.
1. Cash sales: Cash is collected when the sale is made and the goods or services are delivered to the customer.
2. Credit sales: Customers are given a period of time after the sale is made to pay the seller.
3. Advance payment sales: Customers pay the seller in advance before the sale is made.
Credit Terms and Credit Sales
It is common for credit sales to include credit terms. Credit terms are terms that indicate when payment is due for sales that are made on credit, possible discounts, and any applicable interest or late payment fees.
For example, the credit terms for credit sales may be 2/10, net 30. This means that the amount is due in 30 days (net 30). However, if the customer pays within 10 days, a 2% discount will be applied.
Assume Company A sold $10,000 worth of goods to Michael. Company A offers credit terms 5/10, net 30. If Michael pays the amount owed ($10,000) within 10 days, he would be able to enjoy a 5% discount. Therefore, the amount that Michael would need to pay for his purchases if he paid within 10 days would be $9,500.
How to Record a Credit Sale
On January 1, 2018, Company A sold computers and laptops to John on credit. The amount owed is $10,000, due on January 31, 2018. On January 30, 2018, John made the full payment of $10,000 for the computers and laptops
What is the treatment of final accounts:
What is Accounting Treatment:
An asset that is completely depreciated and continues to be used in the business concern will be reported on the balance sheet (B/S) at its cost along with its accrued depreciation. There will be no depreciation expense maintained after the asset is completely depreciated. No entry is needed until the asset is disposed of via sale, salvage, retirement, etc.,
When the firm is dissolved :
Its books of a/c are to be closed, and the profit or loss (P/L) emerging on the realisation of its assets and dismissal of liabilities is to be calculated
For this purpose, a Realisation a/c is outlined to determine the net effect (profit/loss) of realisation of assets and payment of liabilities which might be is transferred to the partner’s capital a/c in their profit sharing ratio (PSR)
Therefore, all assets and external liabilities are transferred to this a/c
It records the sale of assets and payment of liabilities and realisation expenditures
The balance in this account is known as profit/loss on realisation which is transferred to partners’ capital a/c in their profit sharing ratio (PSR)