Problem 1

On December 1, 2020, ABC Company has a cash balance of OMR 50,000, Accounts Receivable balance of OMR 40,000 and Allowance for Doubtful Accounts of OMR 2,000 before adjustment. The following transactions are for the month of December.

Dec. 1 Shareholders new contributions to the company equity for a total of OMR 70,000

Dec. 2- ABC sold goods to cash customers, list price is OMR 5,000 with a trade discount of 20%.

Dec. 3- ABC sold goods to customer XYZ on account, OMR 3,000, trade discount of 10%, Term is 2/10, n/30.

Dec.4 - ABC purchased a machine from KM Company for total price of OMR 5,000, made a down payment of 40% and the balance on account.

Dec. 5- Acquired a loan from Bank Muscat, loan proceeds amounted to OMR 20,000

Dec. 6 Customer XYZ informed the company that goods worth OMR 500 are damaged upon purchase and requested for reduction of its account.

Dec. 8 Collected 60% of the account of customer XYZ.

Dec. 15 - Paid 30% of the account with KM

Dec. 19- Sold goods to customer GBN worth OMR 5,000, received a 60 day, 9% note.

Dec. 30 Paid installment with Bank Muscat loan, OMR 500

ABC Company estimated that 10% of their outstanding accounts receivable will be uncollectible.

Requirement:

a. Prepare the journal entries for the month of December 2020

b. Prepare and complete the ledger for Cash and Accounts Receivable

c. How much is the Net Realizable Value of Accounts Receivable as of December 31, 2020?

d. How much is the cash proceeds of the note collection with customer GBN on maturity date?