The following transactions relate to the gardening maintenance business of Steve Jones. The balance in the Allowance

Question:

The following transactions relate to the gardening maintenance business of Steve Jones. The balance in the Allowance for Doubtful Debts account on 1 July 2014 was $7440. The bad debts during the year ended 30 June 2015 amounted to $5220. Debtors’ balances on 30 June 2015 after the bad debts had been written off total $162 960, and a new allowance of 5% of debtors is required. (Ignore GST for the purposes of this exercise.)

Required

A. Prepare and balance the Allowance for Doubtful Debts accounts for the year to 30 June 2015.

B. Show how the above information would be disclosed in:

1. The income statement for the year ended 30 June 2015

2. The balance sheet as at 30 June 2015.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

Fantastic news! We've Found the answer you've been seeking!