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A company sold goods on credit of the value ₹ 500000 on 1st May 2009 to a party named Z Ltd. paid ₹

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A company sold goods on credit of the value ₹ 500000 on 1st May 2009 to a party
named Z Ltd. paid ₹ 250000 on 25th August 2009. On 12th Dec 2009 Z Ltd. refused to
pay balance amount and it becomes bankrupt. During the financial year 2009-10,pass journal entries.and state AS

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Quick Summary

This discussion details the accounting treatment for a company that sold goods on credit for ₹500,000. After receiving a partial payment of ₹250,000, the customer, Z Ltd., became bankrupt and refused to pay the remaining balance. The provided journal entries cover the initial sale, the part payment received, and the recognition of bad debts. It also raises the question of whether AS 9 (Revenue Recognition) is applicable in this scenario.

Guest

Pls someone solve it😭

prasad Nilugal

GST Practitioner & Accounts

15146 Points Posted on 23 October 2021

Booking entry
on 1/5 /2009

Z Ltd A/c Dr 500000/-
To sales A/c Cr 500000/-
( sale to Z Ltd )

when you received part payment on
25/8/2009

Bank A/c Dr 250000/-
To Z Ltd. A/c Cr 250000/-
( part Payment received )

on 12/12 /2009 pass entry of Bad Debts

Bad Debts A/c Dr 250000/-
To Z Ltd. A/c Cr. 250000/-
( Z Ltd become bankrupt , unable to pay balance payment hence Bad Debts )

I think AS 9( Revenue recognition) will applicable , please confirm .