Question
1.Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables: On 25 February, received RM 500 from Jason and wrote off
1.Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables:
- On 25 February, received RM 500 from Jason and wrote off the remainder owed of RM 4,000 as uncollectible.
- On 9 May, reinstated the account of Jason and received RM 4,000 cash in full payment.
2.Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables:
- On 19 September, received RM100 from Zaidi and wrote off the remainder owed of RM500 as uncollectible.
- On 20 December, reinstated the account of Zaidi and received RM500 cash in full payment.
3.Lina prepares account to 30 September each year. On 30 September 2008, she decided to establish an allowance (provision) for doubtful debts equal to 1% of debtors and to maintain the provision at 1% debtors in the future accounting years. Her debtors and bad debts can be summarized as follows:
a) Debtors at year-end (before writing off bad debts):
- 30 Sept 2008: RM 22,400
- 30 Sept 2009: RM 21,700
- 30 Sept 2010: RM 15,000
b) Bad debts to be written off:
- 30 Sept 2008: RM 1,300
- 30 Sept 2009: RM 800
- 30 Sept 2010: RM 50
Based on the summary above, you are required to:
(i)Make the necessary book-keeping entries into ledger account to record Lina's bad debts and her provision for doubtful debts
(ii)Shows the relevant extracts from income statement for the year ended 30 Sept 2008, 2009 and 2010, and the Balance Sheet as at those dates
4.The information below is about Boss Enterprise for the year ended 31 Dec 2010.
- Debtor (before bad debt write off): RM 120,000
- Bad debt write off: RM 3,000
- Allowance for doubtful debt: RM 3,800
Boss Enterprise expected that uncollectible debt is 5% from the debtors balance.
Based on the above facts, show the followings:
(i)The debtors' account on 31 Dec 2010.
(ii)The bad debt expense account on 31 Dec 2010.
(iii)Calculate the allowance for doubtful debt for the year ended 31 Dec 2010.
(iv)The allowance for doubtful debt account on 31 Dec 2010
5.Why does the accounting profession require the use of the allowance method of accounting for losses due to bad debts rather than the direct write-off method?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started