1. Agogo Trading has the following account balances as at 30 June 2019. RM Account Receivable 200,000 Provision for doubtful debt 6,000 On 30 June 2019, the following adjustment have to be made: i. Debts of RM500 are to be written off as bad ii. One of the entities with accounts receivable whose debts had previously been written off as bad sent a cheque for RM1,000 in full settlement of the amount owed iii. Provision for doubtful debts is 2% of the outstanding accounts receivables Required: For the year ending 30 June 2019 show the: a) Provision for doubtful debts account b) Statement of Profit or Loss (extract) c) Statement of Financial Position (extract)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
1. Agogo Trading has the following account balances as at 30 June 2019.
RM
Account Receivable 200,000
Provision for doubtful debt 6,000
On 30 June 2019, the following adjustment have to be made:
i. Debts of RM500 are to be written off as bad
ii. One of the entities with
written off as bad sent a cheque for RM1,000 in full settlement of the amount
owed
iii. Provision for doubtful debts is 2% of the outstanding accounts receivables
Required:
For the year ending 30 June 2019 show the:
a) Provision for doubtful debts account
b) Statement of Profit or Loss (extract)
c)
2. The following is a summary of account receivable and related accounts for three
years for Tommy Enterprise the financial year ends 30 April each year.
Year ended 30
April
Account receivable
as at 30 April (before
writing off
debts
RM
Bad debts
written off
RM
Provision for
doubtful debt
2017 70,000 Nil 2%
2018 61,000 1,000 2%
2019 83,000 3,000 2%
For the year ending 30 April 2017, 2018, 2019, show the:
a) Provision for doubtful debts account
b) Statement of Profit or Loss (extract)
c) Statement of Financial Position (extract)
3. The following is the
Particulars Debit (RM) Credit (RM)
Capital 48,400
Drawings 3,500
Trade receivables 9,000
Trade payables 12,500
Sales 40,400
Purchases 31,000
Sales returns 300
Purchases returns 250
Wages and salaries 5,600
Discounts allowed 120
Discounts received 200
Provision for doubtful debts 300
Insurance 700
Inventory as at 1 September 2018 2,400
Utilities 950
Rates 350
Premises 10,000
Fixtures and fittings 3,000
Motor van 20,000
Cash in hand 330
Cash at bank 14,800
TOTAL 102,050 102,050
Additional information as at 31 August 2019:
i. Inventory as at 31 August 2019 amounted RM3,300
ii. An entity from whom there is accounts receivables of RM200 was unable to
settle his debt and this amount is to be written off as bad debts.
iii. The provision for doubtful debts is 1% of the outstanding trade receivables.
iv. The owner took RM100 worth of goods from the business for his own use
Required:
a) Statement of Profit or Loss and Others Comprehensive Income for the year
Ended 31 August 2019.
b) Statement of Financial Position as at 31 August 2019.
4. Mr Hidayat is a sole trade who maintain his non-current asset at cost. On 31 December
2019, he owned the following non-current asset which had been depreciated on a
yearly basis:
Asset Cost (RM) Accumulated
Motor vehicles 260,000 70,000
Fixtures 74,000 37,200
During the year ended 31 December 2020, motor vehicles worth RM100,000 and
fixtures worth RM13,000 were purchased.
The motor vehicles were depreciated at 10 % per annum using the straight-line
method and the fixtures at 20% per annum using the
Required:
a) Motor vehicles account
b) Fixtures account
c) Accumulated depreciation accounts for each of the non-current assets for the
ended 31 December 2020
d) Statement of Financial Position (extract) as at 31 December 2020
5. Lepat Trading prepared its account on 30 June every year. On 30 June 2019, the
statement of financial position of Lepat Trading showed the folowing.
Statement of Financial Position as at 30 June 2019
RM RM
Non-Current Asset
Machinery 100,000
Accumulated
depreciation
20,000
80,000
Motor vehicles 160,000
Accumulated
depreciation
96,000
64,000
During the year ended 30 June 2020, machinery worth RM20,000 and motor vehicles
worth RM60,000 were purchased by cheques. The machinery was depreciated at 10%per annuum using the
using the reducing balance method.
Required:
Show the following for the year 2020:
a) Machinery account
b) Motor vehicles account
c) Accumulated depreciation accounts for machinery and motor vehicles respectively
d) Statement of Financial Position (extract) as at 30 June 2020
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