Final answer:
The journal entries Lenovo would record for trade receivables typically involve debiting trade receivables and crediting sales revenue upon making a credit sale, and debiting cash and crediting trade receivables when payment is received.
Step-by-step explanation:
To determine what journal entries Lenovo recorded relative to trade receivable in year 2, one would need access to Lenovo's financial statements or accounting records for that year. Typically, trade receivables involve transactions related to the sales made on credit. When Lenovo makes a sale on credit, it would record a debit to trade receivables and a credit to sales revenue. Conversely, when payment is received against the outstanding receivable, the company would record a debit to cash and a credit to trade receivables to reflect the receipt of payment.
For example, if Lenovo sold products worth $10,000 on credit, the journal entry would be:
- Debit Trade Receivables $10,000
- Credit Sales Revenue $10,000
Then, when the customer pays off their balance, the entry would be:
- Debit Cash $10,000
- Credit Trade Receivables $10,000
This process helps Lenovo to keep track of money that customers owe (accounts receivable) and ensure accurate financial reporting.