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Question 3 (Topic 8) - 9 marks On 1 June 2020, Mason Ltd. had Accounts Receivable $424,778 and Allowance for Doubtful Debts accounts $6,050. Ignore
Question 3 (Topic 8) - 9 marks
On 1 June 2020, Mason Ltd. had Accounts Receivable $424,778 and Allowance for Doubtful Debts accounts $6,050. Ignore GST.
During June, the following transactions occurred:
- Revenue earned on credit, $597,500.
- Sales returns, $12,050.
- Accounts receivable collected, $700,000.
- Accounts written off as uncollectable, $5,926.
Based on an ageing of accounts receivable on 30 June, the firm determined that the Allowance for Doubtful Debts account should have a credit balance of $6,750 on the balance sheet as at 30 June 2020. Ignore GST.
Required:
- Prepare general journal entries to record the four transactions. (4 marks)
- Prepare journal entries to adjust the bad debts expense and allowance for doubtful debts account. (1.5 marks)
- Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June 2020. (2 marks)
- On 10 July 2020, Kent Ltd, whose $1,300 account had been written off as uncollectable in June, paid its account in full. Prepare journal entries to record the collection. (1.5 marks)
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