Reference no: EM132751607
Question - Information related to A-TenH Pty Ltd for the year 20X9 is summarised below. Financial year is ended at 30th June.
Total credit sales $1,015,000
Sales return and allowance $15,000
Doubtful debts written off $30,000
Opening Balance of Allowance of Doubtful Debt $35,000
Bad debt estimation under ageing of acc. Rec. method $25,000
Balance in the ledger of Acc. Receivable before the estimation of bad debt expense $1,000,000
(Above information may not be applicable to all methods applied)
Three methods are used to estimate the bad debt expense. Answering the following questions for each method applied below.
a) Direct write-off method,
b) 3% of net credit sales method, and
c) Ageing of account receivable method.
Required -
1. Prepare the journal entry to recognize bad debt expense.
2. Estimate the closing balance of allowance of doubtful debts.
3. Estimate the carrying amount of account receivable at the end of the year 20X9.