Reference no: EM132578313
Question - Beach Collectibles deals in antique items. All sales are conducted on a credit basis and no cash discounts are given. GST is 10%. The following information was extracted from the accounting records at 30 June 20x9.
Sales $283,000
Sales returns and allowances 27,000
Cash collected 150,400
Debts to be written off 3,200
Assume that Beach Collectibles uses the allowance method of accounting for bad debts and the Allowance for Doubtful Debts account had a credit balance of $4,200 at 1 July 20x8. Also assume that an allowance of 3% of net credit sales is required at 30 June 20x9 (GST is 10%).
Required -
Show the general journal entries required to write off the bad debts and to record the required allowance for doubtful debts.
What amount would be shown for bad debts expense in the income statement at 30 June 20x9?
Show how accounts receivable would be recorded in the balance sheet at 30 June 20x9?
Discuss how the Allowance for Doubtful Debts account might have a debit balance before the end-of-period adjustment is made.