Question 2 (25 Marks)

Sophie Sdn Bh sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal vear-end. The 2020 financial position disclosed

the Tonowing.

Current assets:

Receivables

Less: Allowance for bad debts

RM516,000

(39,000)

RM477,000

During 2022, credit sales were RM1,805,000, cash collections from customers RM1,075,000, and RM44,000 in accounts receivable were written oft. In addition, RM3,500 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at 31 December 2022, reveals the following:

Age Group

0-60 days

61-90 days

91-120 days

Over 120 davs

Percentage of Year-End

Receivables in Group

70%

20

Percent Uncollectible

5%

15

20

40

Required:

Prepare journal entries to account for the 2022 write-offs and the collection of the receivable

previous v written oft.

(4 marks)

(CLO1:PLO2:C3)

Prepare the year-end adjusting entry for bad debts according to each of the following situations:

Bad debt expense is estimated to be 4% of credit sales for the year.

Bad debt expense is estimated to be 10% of the year-end balance in accounts receivable.

Bad debt expense is estimated by an aging of accounts receivable.

(8 marks)

(CLO1:PLO2:C4)

For situations (i)-(iii) in requirement (b) above:

determine the net amount of accounts receivable to be reported in the statement of financial position.

prepare a statement of profit or loss (extract)

(5 marks)

(CLO1:PLO2:C4)

Provide TWO (2) opinions on why should Sophie Sdn Bh allocate some amount as uncollectible or bad debts.

(4 marks)

(CLO1:PLO2:C4)

Recommend any FOUR (4) actions to be taken to effectively manage the receivables in the

company.

can i get the answer within 15 minutes

Question 2 (25 Marks) Sophie Sdn Bhd sels its products to customers on a crects basis An adjusting entry for bad dett expense is recorded only at December 31 , the compan/s fiscal year-end. The 2020 finaricial position disclosed the following: During 2022. credit sales were RM1.805,000, cash collection from customers FM1.005,000 and AMAS, 000 in accounts receivable were written off, in addrion, AMM, 500 was coliected from a customer whose account was written off in 2020. As agine of accounts recervable at 31 December 2022, reviols the followine: Required: a. Prepare joumal entries to account for the 2022 write-offs and the collection of the rectivable previoushy wraten off. (4) mara) (CiO1 PLO2:C3) b. Prepare the year end adjustire entry for bad debas according to each of the followine situason: 1. Bad debt expense is estimated to be 4N of crede sales for the vear: ii. Bad debt expende is estimated to be 10% of the year end balance in actounts receivable. iii. Bad debt expense is estimated by an agng of accounts receivable. (5 maks) (ClO1 Pro2 C4) c. For situations (ti (ii) in requirement (b) above: 1. determine the net amourt of accounts receivatie to be reported in the statement of francial position. 2 k. prepare a statement of profit or loss (extract) (5 marks) [Coi-proz:c4) d. Provide TWO (2) opinions on Why should Sophie Sdn Bhd allocate some amount as uncollectible or bad debts (4 marks\} (Cioi 202(4) e. Recommend any FOUR (4) actions to be taken to effectively manage the recemables in the company. (4 marks) [CLOLPLo:Cs]