Reference no: EM132534913

Point 1: King Kindness is a wholesale business owned by Kingsley Bond and based in Kwazulu Natal. The business supplies a variety of imported cold meats and sausages to local restaurants and food retailers. The business has a financial year-end of 31 August.

Point 2: On 31 August 2018, Kingsley was informed by his accountant that one of his main credit customers, Divine Deli, had gone insolvent and was unable to pay the full debt of R98 900 owing to King Kindness from purchases made during the current financial year. According to a letter received from Divine Deli's lawyer, Divine Deli will pay 30 cents for each rand owing to King Kindness. On 15 September 2018, the amount was received in accordance with the letter i.e. King Kindness received the 30 cents for each rand owing.

Point 3: On 1 December 2018, King Kindness received an e-mail from Divine Deli's lawyer to say that the owner of Divine Deli had won some money by playing the lotto and that an additional 25% of the original debt owing had been paid to King Kindness. The e-mail included proof of payment for this transaction dated 1 December 2018.

You are required to:

Question 1: Prepare the journal entries that would have been processed in the general journal of King Kindness on the dates underlined above in order to account for the infor-mation provided. Show dates and calculations. Ignore narrations.

Question 2: Explain why you recognized the item(s) that you debited in the entry/ies that you processed on 31 August 2018. If there is more than one debit, discuss each item separately. If the item recognized is an income or expense, your explanation should refer to the conceptual framework definition. The explanation relating to any other element should not include the full definition.