Basic Financial Accounting - Sales, Trade Debtors And Bad Debt

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Basic Financial Accounting - Sales, Trade Debtors And Bad Debt

How to post sales, trade debtors and bad debt. A thorough course in Basic Financial accountingImage courtesy of adamr / FreeDigitalPhotos. Net


Questions and Answers
  • 1. 
    28. Journal entry of payment from debtor (customer) - always ignoring VATA company just received payment from an earlier credit sale to a costumer. The amount received is 75.000. The amount is transferred from the costumer into the company’s bank account.How should the information above be posted?
    • A. 

      The trade debtors account (asset) is credited 75.000 while the cash account (asset) is debited 75.000.

    • B. 

      The trade debtors account (asset) is credited 75.000 while the bank account (asset) is debited 75.000.

    • C. 

      The other debtors account (asset) is credited 75.000 while the bank account (asset) is debited 75.000.

    • D. 

      The trade debtors account (asset) is debited 75.000 while the bank account (asset) is credited 75.000.

  • 2. 
    24. Journal entry of credit sales to customers – without VATA trading company just sold a quantity of goods to a costumer. The invoice amount was 20.000 and the company has granted the costumer 10 days of credit.How should the information above be posted? 
    • A. 

      The trade debtors account (asset) is debited 20.000, the sales account (profit/loss) is credited 20.000.

    • B. 

      The trade debtors account (asset) is debited 20.000, the accrued income account (liability) is credited 20.000.

    • C. 

      The trade debtors account (asset) is credited 20.000, the sales account (profit/loss) is debited 20.000.

    • D. 

      The cash account (asset) is debited 20.000, the sales account (profit/loss) is credited 20.000.

  • 3. 
    26. Journal entry of credit notes to debtors (customers) – without VATA company just issued a credit note to a debtor for a part of a previous sale. The value of the credit note is 5.000.How should the information above be posted? 
    • A. 

      The cash account (asset) is credited 5.000 while the trade debtors account (asset) is debited 5.000.

    • B. 

      The sales account (profit/loss) is debited 5.000 while the trade debtors account (asset) is credited 5.000.

    • C. 

      The sales account (profit/loss) is credited 5.000 while the trade debtors account (asset) is debited 5.000.

    • D. 

      The cash account (asset) is debited 5.000 while the trade debtors account (asset) is credited 5.000.

  • 4. 
    25. Journal entry of credit sales to customers – with VATA trading company just sold a quantity of goods to a customer. The invoice amount was 50.000 including 10.000 in VAT and the company has granted the costumer 15 days of credit.  How should the information above be posted?
    • A. 

      The trade debtors account (asset) is debited 50.000, the sales account (profit/loss) is credited 50.000.

    • B. 

      The trade debtors account (asset) is debited 40.000, the sales account (profit/loss) is credited 40.000.

    • C. 

      The trade debtors account (asset) is debited 50.000, the sales account (profit/loss) is credited 40.000 while the input VAT account (liability) is credited 10.000.

    • D. 

      The trade debtors account (asset) is debited 50.000, the sales account (profit/loss) is credited 40.000 while the output VAT account (liability) is credited 10.000.

  • 5. 
    27. Journal entry of credit notes to debtors (customers) – with VATA company just issued a credit note to a debtor for a part of a previous sale. The value of the credit note is 25.000 including 5.000 in VAT.How should the information above be posted?
    • A. 

      The sales account (profit/loss) is debited 20.000, the trade debtors account (asset) is credited 25.000 while the output VAT account (liability) is debited 5.000.

    • B. 

      The sales account (profit/loss) is debited 25.000, the trade debtors account (asset) is credited 20.000 while the output VAT account (liability) is credited 5.000.

    • C. 

      The sales account (profit/loss) is debited 20.000, the trade debtors account (asset) is credited 25.000 while the input VAT account (liability) is debited 5.000.

    • D. 

      The sales account (profit/loss) is credited 20.000, the trade debtors account (asset) is debited 25.000 while the output VAT account (liability) is credited 5.000.

  • 6. 
    29. Journal entry of an expected loss on trade debtorsA company has not received timely payment from one of its debtors concerning a sale of 100.000 including VAT of 20.000. The company has repeatedly tried to collect the debt but has not been able to get in contact with the debtor. The company therefore expects the debt to be lost. However, since the debtor has not yet been declared bankrupt, the loss is only expected and not yet written off.How should the information above be posted? 
    • A. 

      The sales account (profit/loss) is debited 80.000 while the provision for bad debt account (asset) is credited 80.000.

    • B. 

      The loss on debtors account (profit/loss) is credited 80.000, the provision for bad debt account (asset) is debited 100.000 while the output VAT account (liability) is credited 20.000.

    • C. 

      The loss on debtors account (profit/loss) is debited 80.000, the provision for bad debt account (asset) is credited 100.000 while the output VAT account (liability) is debited 20.000.

    • D. 

      The loss on debtors account (profit/loss) is debited 80.000 while the provision for bad debt account (asset) is credited 80.000.

  • 7. 
    30. Journal entry of an incurred loss on trade debtors A company has just received news that one of its trade debtors has gone bankrupt. The company previously expected the loss and the loss was posted according to the expectations. The outstanding amount was 250.000 including 50.000 in VAT. The company previously posted a provision for bad debt on this debtor for 200.000 ex VAT. The dividend from the bankruptcy was 0. How should the information above be posted?
    • A. 

      The trade debtors account (asset) is credited 250.000, the loss on trade debtors account (profit/loss) is debited 200.000 while the output VAT account (liability) is debited 50.000.

    • B. 

      The trade debtors account (asset) is credited 250.000, the loss on trade debtors account (profit/loss) is debited 200.000 while the input VAT account (liability) is debited 50.000.

    • C. 

      The loss on trade debtors account (profit/loss) is debited 200.000 while the provision for bad debt account (asset) is credited 200.000.

    • D. 

      The trade debtors account (asset) is credited 250.000, the provision for bad debt account (asset) is debited 200.000 while the output VAT account (liability) is debited 50.000.

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