Question

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.

Answer 1

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 :).