Peakhurst Limited had the following trial balance at 1 January 2016: Debit $ Credit $ Cash 200 000 Accounts receivable 600 000 Inventory 700 000 Prepaid insurance 60 000 Prepaid rent 50 000 Equipment 1 000 000 Allowance for doubtful debt 20 000 Accumulated depreciation 200 000 Accounts payable 500 000 Revenue received in advance 100 000 Income tax payable 500 000 Loan 570 000 Share capital 400 000 Retained profits 320 000 Total 2 610 000 2 610 000 You are given the following additional information for the year ended 31 December 2016: a) Bad debts of $8000 were written off. b) It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable. Required: 1) Prepare journal entries for these transactions. 2) Show the T-ledger accounts for the following for the year ended 31 December 2016: a) accounts receivable b) allowance for doubtful debts c) bad debts expense
Question no 1
Peakhurst Limited had the following
Debit $ Credit $
Cash 200 000
Accounts receivable 600 000
Inventory 700 000
Prepaid insurance 60 000
Prepaid rent 50 000
Equipment 1 000 000
Allowance for doubtful debt 20 000
Accounts payable 500 000
Revenue received in advance 100 000
Income tax payable 500 000
Loan 570 000
Share capital 400 000
Retained profits 320 000
Total 2 610 000 2 610 000
You are given the following additional information for the year ended 31 December 2016:
a)
b) It was decided that allowance for doubtful debts should be 4 per cent of accounts receivable.
Required:
1) Prepare
2) Show the T-ledger accounts for the following for the year ended 31 December 2016:
a) accounts receivable
b) allowance for doubtful debts
c) bad debts expense
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