On 5th August 2022, Alpha supplies sold office equipment worth K75,000 to Beta Traders on credit for 20 days. From 5th August until the payment is made, K75000 is recorded as an account receivable in the book of Alpha supplies under Beta traders account. Now assume that on 15th August 2022, Beta Traders makes a partial payment of K45000 to Alpha Suplkies.

A) you are required to journalize the initial transaction of the 5th August 2022 by Alpha Supplies to record the credit sales to Beta Traders.
B) you are to journalize partial payment received by Alpha Supplies on the 15th August 2022.

1 answer

To journalize the initial transaction of the credit sale and the partial payment received, we will create the journal entries for Alpha Supplies for both scenarios.

A) Journal Entry for the Initial Transaction on 5th August 2022

Date: 5th August 2022
Description: Sale of office equipment on credit to Beta Traders
Journal Entry:

| Date | Account Titles | Debit (K) | Credit (K) | |------------------|---------------------------------|-------------|-------------| | 5th August 2022 | Accounts Receivable - Beta Traders | 75,000 | | | | Sales Revenue | | 75,000 |

Explanation: This entry records the credit sale of office equipment amounting to K75,000 to Beta Traders. The Accounts Receivable account is debited (increased), while Sales Revenue is credited (increased).

B) Journal Entry for Partial Payment Received on 15th August 2022

Date: 15th August 2022
Description: Partial payment received from Beta Traders
Journal Entry:

| Date | Account Titles | Debit (K) | Credit (K) | |------------------|---------------------------------|-------------|-------------| | 15th August 2022 | Cash | 45,000 | | | | Accounts Receivable - Beta Traders | | 45,000 |

Explanation: This entry records the partial payment of K45,000 received from Beta Traders. The Cash account is debited (increased), showing the inflow of cash, while the Accounts Receivable account is credited (decreased), reflecting the reduction in the amount owed by Beta Traders.

This provides a complete view of the transactions for Alpha Supplies with Beta Traders, including the initial sale and the partial payment received.