Reference no: EM132998171
At 1 June, the balances of Accounts Receivable and Allowance for Doubtful Debts accounts for Bevan Ltd are provided below. This business has a 30 June year-end. The firm is not registered for GST.
Accounts Receivable $847,000 Dr
Allowance for Doubtful Debts $12,250 Cr
During June, the following transactions occurred:
1. Service fees earned on credit, $1,200,000
2. Service fees returned, $25,000
3. Accounts receivable collected, $1,450,000
4. Accounts written off as uncollectible, $14,740
5. Based on an ageing of Accounts receivable at 30 June, the firm decided that $13,000 is expected to be uncollectible based on the age of their accounts.
Required;
Problem 1. Prepare general journal entries to record the transactions above. Ignore narrations.
Problem 2. Update the general ledger account for the Allowance for Doubtful Debts to reflect these transactions and year-end adjustment.
Problem 3. Show how Accounts receivable would be reported on the balance sheet at 30 June.
Problem 4. On 29 July, Chan Ltd, whose $1,870 account had been written off as uncollectible in June, paid its account in full. Prepare journal entries to record this event.
Problem 5. Briefly explain the weakness of the direct write-off method of accounting for Bad debts expense.
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