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When drawing goods for personal use of the owner:
Dr Drawings
Cr PurchasesWhen drawing goods (like computer) for office use:
Dr Non-current assets
Cr Cost of salesWhen drawing goods (chair, table or stationary) for office use:
Dr Drawings
Cr PurchasesAre these 3 entries right??
At one place there is written that the entries for closing inventory are:
Dr Inventory
Cr Income StatementAt another place it’s written
Dr Inventory
Cr Cost of sales
Which one is right??First question:
The first entry is correct.
The second two certainly are not – drawings are always assets taken by the owner. You do not have drawings for office use!
Second question:
They are both right (because cost of sales appears on the income statement!)
During the year, Red made the following accounting entries to account for the increase in the Allowance for receivables:
Debit: Trade receivables $4300
Credit: Allowance for receivables $4300State the journal entries required to account correctly for the increase in the Allowance for receivables for thexample year.
Ans at the back of the kit
Debit: Irrecoverable doubtful debt expense account $4300
Credit: Trade receivables $4300This is wrong right?? The Credit entry should have been Allowance for receivables.
Assuming that you have copied the question correctly, the you are right – the credit entry should certainly have been to the allowance for receivables account.
Damn there are a lot of mistakes in the kit. Thanks a lot, you are a great help 🙂
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