Reference no: EM132577779

Jumbo is a business which acts as a distributor of washing machines entirely on credit terms to a wide range of customers. The following balances were extracted from its ledgers at 30 June 2017.

                                                                           $

Sales                                                   723,800

Trade accounts payables (30/6/16)           49,700

Trade accounts receivables (30/6/16)        84,600

Purchases of washing machines              342,900

Discount allowed                                    8,200

Discount received                                  6,900

Cash from trade accounts receivables     699,200

Cash to trade accounts payables          321,800

Returns inwards                                 36,900

Carriage outwards                              5,300

Overdraft interest                                  12,000

Provision for doubtful debts (30/6/16)         4,800

Subsequent enquiries reveal the following:

• A check of $ 1,200 from B, a customer has been returned by the bank as dishonored. Bad debts totaling to $ 6,900 are to be written off, and the provision for doubtful debts is to rise to 8% of the total receivables balance as at 30/6/17.
• On the last day of the year a check is received for $ 1,000 from the liquidator of JS &co. This customer had owed Jumbo $ 7,500 when it ceased to trade in 2014, and the debt had been written off as a bad debt in the year ended 30/6/15. No entry in respect of this check has been made in the books and the check is yet to be cleared. The firm is not sure whether or not the check will be cleared.

Required:

Question 1: Prepare the receivables control account for the year ended 30/6/17 and clearly show your calculation for the provision for bad debts and the statement of financial position balance of accounts receivables.