Question 2 (10 marks) A credit sale is integral to the AFDD (Limited) AFDD. The accounting...

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Question 2 (10 marks) A credit sale is integral to the AFDD (Limited) AFDD. The accounting records of the company reveal the following data. [Ignore GST]. The details of the accounting transactions Credit sales during the year $ 856.000 Credit sales returns and allowances during the year 72 000 Accounts receivable balance as of 30 June 20X9 261 200 Credit purchases during the year 526 000 Credit purchases returns during the year 62 000 The opening balance of the allowance for doubtful debts is $1 200 (Credit Balance). In the past, the company's yearly bad debt expense had been estimated at 2% of net credit sales revenue. It was decided to compare the current method with an ageing of the accounts receivable method. The following analysis was obtained with respect to the accounts receivable. Nature of A/R Age Balance % of estimated uncollectable Accounts not yet due N/A $140 480 0.5 Accounts overdue by 10-30 days $48 800 02 Accounts overdue by 31-60 days $35 200 10 Accounts overdue by 61-120 days $20 320 25 Accounts overdue by 121 days and over $16 400 40 Total $261 200 Required: a) Prepare journal entries to adjust the allowance for doubtful debts on 30 June 20X9 using the net credit sales method [3 Marks] b) Prepare journal entries to adjust the allowance for doubtful debts on 30 June 20X9 using the ageing of accounts receivable method [3 Marks] c) Determine the balance in the allowance for doubtful debts account under the net credit sales method [2 Marks] d) Determine the balance in the allowance for doubtful debts account under the ageing of accounts receivable method [2 Marks] Question 2 (10 marks) A credit sale is integral to the AFDD (Limited) AFDD. The accounting records of the company reveal the following data. [Ignore GST]. The details of the accounting transactions Credit sales during the year $ 856.000 Credit sales returns and allowances during the year 72 000 Accounts receivable balance as of 30 June 20X9 261 200 Credit purchases during the year 526 000 Credit purchases returns during the year 62 000 The opening balance of the allowance for doubtful debts is $1 200 (Credit Balance). In the past, the company's yearly bad debt expense had been estimated at 2% of net credit sales revenue. It was decided to compare the current method with an ageing of the accounts receivable method. The following analysis was obtained with respect to the accounts receivable. Nature of A/R Age Balance % of estimated uncollectable Accounts not yet due N/A $140 480 0.5 Accounts overdue by 10-30 days $48 800 02 Accounts overdue by 31-60 days $35 200 10 Accounts overdue by 61-120 days $20 320 25 Accounts overdue by 121 days and over $16 400 40 Total $261 200 Required: a) Prepare journal entries to adjust the allowance for doubtful debts on 30 June 20X9 using the net credit sales method [3 Marks] b) Prepare journal entries to adjust the allowance for doubtful debts on 30 June 20X9 using the ageing of accounts receivable method [3 Marks] c) Determine the balance in the allowance for doubtful debts account under the net credit sales method [2 Marks] d) Determine the balance in the allowance for doubtful debts account under the ageing of accounts receivable method [2 Marks]