Journal entry for the following: 1) sold goods of having invoice price of 20000 to kanak brothers at 5%trade discount on 3 months credit. 2) kanak brother becomes insolvent and the amount was recovered @ 75 paise per rupee.
Answers
Answer:
Please find the answer in the explanation section.
Explanation:
1. Kanak Brothers A/c Dr. 19000
To Sales A/c 19000
(Being goods sold to Kanak Brothers on credit at 5% trade discount)
Working note: 0.05 * 20000 = 1000
Therefore, final net price is 20000 - 1000 = 19000.
2. Cash A/c Dr. 14250
Bad debts A/c Dr. 4750
To Kanak Brothers A/c 19000
(Being kanak brother became insolvent and amount recovered @ 75 paise per rupee)
Working note:
75 paise per rupee = 75%
75% of amount owed by Kanak Brothers = 19000 * 0.75 = 14250 as cash
And 19000 - 14250 = 4750 is bad debts as that is amount irrecoverable from Kanak brothers, our debtor.
Hope this helps :).