Question

The balance of the accounts receivable account of Griffin Ltd. at December 31, 2019 was $74,460....

The balance of the accounts receivable account of Griffin Ltd. at December 31, 2019 was $74,460. Included in this balance are the credit balances of two customers, amounting to $3,200 and $1,800.

Required:

1. What amount for accounts receivable would be shown as assets on the balance sheet?

2. How would the credit balances in the customers’ accounts be   disclosed?

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Answer #2
  1. Accounts receivable is current asset of a company and it will have debit balance. The closing debit balance will be shown in asset side of balance sheet. Here in the case given two customer account included in accounts receivables has credit balances. The credit balance from customer would be due to advance received from customer. The amount to be shown as account receivable is $79,460 (i.e $74,460 + $3,200 + $1,800 )
  2. The credit balance in the customer account $ 5,000 ( $3,200 + $1,800 ) should be disclosed as advance received from customers in the liability side under current liabilities.
answered by: anonymous
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