Determine the balance in the allowance for doubtful debts

Assignment Help Managerial Accounting

Reference no: EM133646707

Accounting for Business Decision

Question 1

The accounting department of MNO Limited (MNO) provides two sets of data for June. The first data relates to the purchase, and the second data relates to the sales.

Table 1. The First Set of Data - Purchases
1^st June	1185 units @ 9
6^th June	711 units @ 10
11^th June	474 units @ 12
19^th June	1185 units @11
28^th June	158 units @ 13

The following data relates to the sales:

Table 2. The Second Set of Data - Sales
9^th June	237 units @ 13
14^th June	1422 units @ 13
24^th June	553 units @ 15

Required:
Based on the above information, calculate the following for the month of June 20X0:
a) Cost of goods sold (COGS)

b) Cost of closing inventory

c) The gross profit

Question 2

Credit Sales refer to the revenue earned by a company from its products or services, where the customer paid using credit rather than cash. JKL Limited (JKL) sells its products on credit. The table below presents the information relating to the selected accounts.

Table 1. Sales, A/R and Allowances for Doubtful Debts
Accounts receivable (balance 30 June 20X3)	120805
Allowance for doubtful debts (credit balance 1st July 20X2)	555
Credit sales returns and allowances during the year	33 300
Credit sales during the year	395 900

In the past, the company's yearly bad debt expense had been estimated at 2% of net credit sales revenue. It was decided to compare the current method with an ageing of the accounts receivable method. The following analysis was obtained with respect to the accounts receivable.

Nature of A/R	Age	Balance	% of estimated uncollectable
Not yet due		64972	0.50%
Overdue	10-30 days	22570	02%
	31-60 days	16280	10%
	61-120 days	9398	25%
	121 days and over	7585	40%
		120805

Required:
a) Prepare journal entries to adjust the Allowance for Doubtful Debts at 30 June 20X9 using the net credit sales method.

b) Prepare journal entries to adjust the Allowance for Doubtful Debts at 30 June 20X9 using the ageing of accounts receivable method.

c) Determine the balance in the Allowance for Doubtful Debts account under the net credit sales method.

d) Determine the balance in the Allowance for Doubtful Debts account under the ageing of accounts receivable method.

Question 3

On 1st January 20X1, WWW Limited (WWW) purchased new machinery for $210 560. WWW paid some directly attributable cost to bring this machinery into working condition. In particular, WWW paid the freight cost of $3 580 and the installation cost of $4 843. This machine is expected to have a useful life of ten years with a residual value of $2106. The pattern of economic benefits from using this machinery is constant. Therefore, it is decided that the straight-line depreciation method will be used. Ignore GST.

Required:
a) Determine the cost of the machine

b) Assuming that year ends on 30 June, record the journal entry of depreciation expenses on 30 June 20X3

c) Calculate the accumulated depreciation balance at the end of the fourth year

Question 4
Table 1 presents the information extracted from the accounting records and bank statement of GHI Limited (GHI) at 30 June 20X3.

Table 1.
The closing balance, as shown on the bank statement (Cr) 1575
Cash receipts of 30 June which were deposited on 30thJune did not appear on the bank statement. 792
Cheques recorded in the cash payments but not yet presented for payment to the bank. 589

Required:
a) Prepare the bank reconciliation statement at 30 June, 2010 disclosing the closing balance of cash at the bank.

b) Assume the same data as above, but assume further that the closing balance of the bank account shown on the bank statement is $1 575 Dr., i.e., the bank account is overdrawn). Prepare the bank reconciliation statement at 30 June, 20X3 disclosing the closing balance of cash at the bank.

Question 5

You have performed the processes involved in the SAP S/4HANA Procurement and Fulfilment (recall your SAP ERP assessment). Briefly describe these processes. Is there any theoretical linkage between the fulfilment process and the procurement process? Finally, what challenges did you face in completing SAP ERP Assessment? Note: Your responses will be verified using your SAP ERP account details.

Reference no: EM133646707

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