Question
Question 2 (11 marks) The following information relates to the business of David & Sons Company. The financial year of the company ends at 30
Question 2 (11 marks)
The following information relates to the business of David & Sons Company. The financial year of the company ends at 30 June 2022.
Opening balance of Account Receivables $22 200
Opening balance of the Allowances for Doubtful Debts 2 820
Closing Balance of Account Receivables 28 860
Net credit sales during the year 78 000
During the year, $2 160 of account receivables were written off as bad debts. David & Sons Company uses the net credit sales method to estimate doubtful debts. It is estimated that three per cent of the net credit sales will become uncollectable. Ignore GST.
Required:
Prepare the following accounts (T-account) at the end of 2022 (7 marks)
Account Receivables
Allowances for Doubtful Debts
ANSWER a):
Show how the above information appears in the Income Statement and the Balance Sheet of the company at the end of the financial year (4 marks)
ANSWER b):
Question 2 (11 marks)
The following information relates to the business of David & Sons Company. The financial year of the company ends at 30 June 2022.
Opening balance of Account Receivables $22 200
Opening balance of the Allowances for Doubtful Debts 2 820
Closing Balance of Account Receivables 28 860
Net credit sales during the year 78 000
During the year, $2 160 of account receivables were written off as bad debts. David & Sons Company uses the net credit sales method to estimate doubtful debts. It is estimated that three per cent of the net credit sales will become uncollectable. Ignore GST.
Required:
Prepare the following accounts (T-account) at the end of 2022 (7 marks)
Account Receivables
Allowances for Doubtful Debts
ANSWER a):
Show how the above information appears in the Income Statement and the Balance Sheet of the company at the end of the financial year (4 marks)
ANSWER b):
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Fundamental financial accounting concepts
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
8th edition
978-007802536, 9780077648831, 0078025362, 77648838, 978-0078025365
