On September 9, Mavtech paid $30,000 in advance to suppliers to buy 30 computers. On September 10, Mavtech paid $450 and bought office supplies The computers that were paid for on September 9th were delivered to Mavtech on September 15. On September 17, a customer placed an order on Mavtech for 25 computers for a total price of $31,000. (This does not meet revenue recognition criteria.) On September 21, Mavtech hired an employee. The employee’s wage was fixed at $2,400 per month. The employee will be paid every month on the 21st. The first payment will be made on October 21. On September 22, Mavtech purchased an additional 40 computers for $40,000 on credit, due for payment on October. Prepare Journal Entry
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
On September 9, Mavtech paid $30,000 in advance to suppliers to buy 30 computers.
On September 10, Mavtech paid $450 and bought office supplies
The computers that were paid for on September 9th were delivered to Mavtech on September 15.
On September 17, a customer placed an order on Mavtech for 25 computers for a total price of $31,000. (This does not meet revenue recognition criteria.)
On September 21, Mavtech hired an employee. The employee’s wage was fixed at $2,400 per month. The employee will be paid every month on the 21st. The first payment will be made on October 21.
On September 22, Mavtech purchased an additional 40 computers for $40,000 on credit, due for payment on October.
Prepare
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