Reference no: EM132678313
Problem - On 1 June 2020, Mason Ltd. had Accounts Receivable $424,778 and Allowance for Doubtful Debts accounts $6,050. Ignore GST.
During June, the following transactions occurred:
1. Revenue earned on credit, $597,500.
2. Sales returns, $12,050.
3. Accounts receivable collected, $700,000.
4. Accounts written off as uncollectable, $5,926.
Based on an ageing of accounts receivable on 30 June, the firm determined that the Allowance for Doubtful Debts account should have a credit balance of $6,750 on the balance sheet as at 30 June 2020. Ignore GST.
Required -
a) Prepare general journal entries to record the four transactions.
b) Prepare journal entries to adjust the bad debts expense and allowance for doubtful debts account.
c) Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June 2020.
d) On 10 July, 2020, Kent Ltd, whose $1,300 account had been written off as uncollectable in June, paid its account in full. Prepare journal entries to record the collection.