A clothing wholesaler is experiencing cash flow problems for several years due to its accounts receivables. Some of the amounts due by debtors are irrecoverable and the company is contemplating creating a provision for doubtful debts. (d) The financial year end of the clothing wholesaler is 31 December. You have been provided the following information by the management of the company: YEAR Bad debts written off year to 31 December Accounts receivable at 31 December after bad debts written off Percentage allowance for doubtful debts 1 Use any amount between RM2, 000 and RM3, 000 Use any amount between RM50, 000 and RM60, 000 3 2 Use any amount between RM2, 000 and RM3, 000 Use any amount between RM80, 000 and RM85, 000 5 3 Use any amount between RM1, 000 and RM2, 500 Use any amount between RM65, 000 and RM75, 000 2 4 Use any amount between RM2, 800 and RM5, 500 Use any amount between RM90, 000 and RM100, 000 4 Prepare the following: (i) Bad debts accounts for each of the four years. (ii) Provision for doubtful debts accounts for each of the four years. (iii) The statement of financial position extracts as at 31 December Year 1, Year 2, Year 3 and Year 4.
A clothing wholesaler is experiencing cash flow problems for several years due to its accounts receivables. Some of the amounts due by debtors are irrecoverable and the company is contemplating creating a provision for doubtful debts.
(d) The financial year end of the clothing wholesaler is 31 December. You have been provided the following information by the management of the company:
| YEAR |
|
Percentage allowance for doubtful debts | |
| 1 | Use any amount between RM2, 000 and RM3, 000 |
Use any amount between RM50, 000 and RM60, 000 |
3 |
| 2 | Use any amount between RM2, 000 and RM3, 000 |
Use any amount between RM80, 000 and RM85, 000 |
5 |
| 3 |
Use any amount between RM1, 000 and RM2, 500 |
Use any amount between RM65, 000 and RM75, 000 | 2 |
| 4 |
Use any amount between RM2, 800 and RM5, 500 |
Use any amount between RM90, 000 and RM100, 000 |
4 |
Prepare the following:
(i) Bad debts accounts for each of the four years.
(ii) Provision for doubtful debts accounts for each of the four years.
(iii) The
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