<span>The answer to the question stated above is liquidity.
The ease with which an asset can be converted quickly into cash with little or no loss of purchasing power is liquidity.
>>>Money is said to be perfectly liquid, whereas other assets have a lesser degree of liquidity.</span>
Answer:
<u>Oct 1</u>
Dr Accounts receivable 70,000
Cr Bed debts expense 70,000
(Accounts receivable is an asset and when it increases, they are debited. When expenses increase, they are credited.)
<u>Oct 30</u>
Dr Cash 70,000
Cr Accounts receivable 70,000
(Cash is an asset and when it increases, it is debited. Accounts receivable is an asset and when it decreases, they are credited)
Answer and Explanation:
The journal entries are as follows;
a. On Jan 1
No journal entry is required
b. On Feb 5
Contra asset Dr $1,320
To Sales revenue $1,320
(being sales revenue is recorded)
Cost of goods sold Dr $670
To Inventory $670
(being cost of goods sold is recorded)
c. On Feb 25
Cash $3,300
Contra asset Dr $1,320
To Sales revenue $1,980
(being sales revenue is recorded)
Cost of goods sold Dr $300
To Inventory $300
(being cost of goods sold is recorded)
