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Management Company Accounting Assignment Help UK

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Management Company Accounting Assignment Help UK

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MANAGEMENT ACCOUNTING

Introduction 

Chocomust Ltd company buys and sells premium chocolates and sweets wholesale for distribution to retail outlets with lot of pride we do maintain certain level and we have set our standards very high to grow in the market and to keep a hold on the market adding to that we have decided to keep an account of our transactions, past records and on going in and out stock. In order to do that finally we decided to maintain a cash budget and find out its actual sales and it was found that while doing the calculation some of our lacks and loop holes are  there , some like sales were on credit and  were pending for months it came to our notice when we checked and bought out the entries, we then started pushing for our collections and finally it was showing us results and was giving in one month after the sales was done and eventually it was paid in percentages a month later and it carried on the same way thereafter. 

Part 1

You must be wondering what is credit sales all about let me give you a glimpse of it credit sales are purchases made by customers for which payment is delayed or you can say it gives them time which they need to do business in day to day life . Delayed payments do allow customers to generate cash with the purchased goods, which is then used to pay back the seller at their own sweet time. Thus, a reasonable payment delay allows customers to make additional purchases in bulks and stock them. The use of credit sales is a key competitive tool in some industries where they do not have much investments in the business and they do need help from these peoples, where longer payment terms can be used to attract additional customers and encourage them to buy more and more  . But on the other hand there is always a risk of your money not being paid of which in accounting language we say a bad debt, now you must be wondering what is a bad debt, I will explain it to you, a bad debt is a receivable that a customer will not pay or rather they are not willing to pay it . Bad debts arise under some circumstances that we as a business do not want to look at as it gives us a setback when a company plans extends too much credit to a customer that is incapable of paying back the debt at any point of time, resulting in either a delayed or reduced, or missing payment which occurs, when a customer misrepresents itself in obtaining a sale on credit, and has no intent of paying the seller ever as they keep on delaying. The situation is caused by bad internal processes or changes in the ability of a customer to pay. The other situation may be caused by a customer intentionally engaging in fraud where their intention was always not to pay and pile up the credit as much as they can, which often can be dangerous for any business. 

Part 2

However, doing or rather coming to business I could not have thought of it much as things often occur and there are ways to counter it one is direct write off If it is done it will only reduce accounts receivable when there is a specific or recognizable bad debt and then debit the bad debt expense for the amount of the write off, and credit the accounts receivable asset account for the same amount. Nest step that can be taken is allowance method.

Conclusion 

If you charge an estimated amount of accounts receivable to bad debt expense in the same period when you record related revenue, then the debit of the Bad Debt expense for the amount of the estimated write-off, and credit the allowance for doubtful way contra account for the same amount. these are few loop holes which steps can be taken if you face certain problems doing business in day to day life and dealing with multiple people with different targets and goals in life to achieve what they want to in order to reach to a point, it is very important to pay off your loans , rents time to times so that you are not penalised. Like that the Rental Expense and Insurance expense which was pending for the month September was also paid in October too.

 

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