12.10 Doubtful debts – ageing method * LO3 On 1 June, McLean, Roberts and Associates had Accounts Receivable and Allowance for Doubtful Debts accounts as set out below. Ignore GST. Accounts Receivable 1/6 Balance 847 000 Allowance for Doubtful Debts 1/6 Balance 12 250 During June, the following transactions occurred: 1. fees earned on credit, $1 200 000 2. fees refunded, $25 000 3. accounts receivable collected, $1450 000 4. accounts written off as uncollectable, $14 740. Based on an ageing of accounts receivable on 30 June, the firm decided that the Allowance for Doubtful Debts account should have a credit balance of $13 000 on the balance sheet as at 30 June. Required (a) Prepare general journal entries to record the four transactions above and to adjust the Allowance for Doubtful Debts account. (b) Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June. (c) On 29 July, Blundell Ltd, whose $1870 account had been written off as uncollectable in June, paid its account in full. Prepare journal entries to record the collection.
12.10 Doubtful debts – ageing method * LO3 On 1 June, McLean, Roberts and Associates had Accounts Receivable and Allowance for Doubtful Debts accounts as set out below. Ignore GST. Accounts Receivable 1/6 Balance 847 000 Allowance for Doubtful Debts 1/6 Balance 12 250 During June, the following transactions occurred: 1. fees earned on credit, $1 200 000 2. fees refunded, $25 000 3. accounts receivable collected, $1450 000 4. accounts written off as uncollectable, $14 740. Based on an ageing of accounts receivable on 30 June, the firm decided that the Allowance for Doubtful Debts account should have a credit balance of $13 000 on the balance sheet as at 30 June. Required (a) Prepare general journal entries to record the four transactions above and to adjust the Allowance for Doubtful Debts account. (b) Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June. (c) On 29 July, Blundell Ltd, whose $1870 account had been written off as uncollectable in June, paid its account in full. Prepare journal entries to record the collection.
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter8: Receivables
Section: Chapter Questions
Problem 8.4BE: Analysis of receivables method At the end of the current year, Accounts Receivable has a balance of...
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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.
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Transcribed Image Text:12.10 Doubtful debts – ageing method *
LO3
On 1 June, McLean, Roberts and Associates had Accounts Receivable and Allowance for
Doubtful Debts accounts as set out below. Ignore GST.
Accounts Receivable
1/6
Balance
847 000
Allowance for Doubtful Debts
1/6
Balance
12 250
During June, the following transactions occurred:
1. fees earned on credit, $1 200 000
2. fees refunded, $25 000
3. accounts receivable collected, $1450 000
4. accounts written off as uncollectable, $14 740.
Based on an ageing of accounts receivable on 30 June, the firm decided that the Allowance
for Doubtful Debts account should have a credit balance of $13 000 on the balance sheet as at
30 June.
Required
(a) Prepare general journal entries to record the four transactions above and to adjust the
Allowance for Doubtful Debts account.
(b) Show how accounts receivable and the allowance for doubtful debts would appear on the
balance sheet at 30 June.
(c) On 29 July, Blundell Ltd, whose $1870 account had been written off as uncollectable in June,
paid its account in full. Prepare journal entries to record the collection.
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