QUESTION TWO

1. Highlight two weeknesses of direct write offs of uncollectible accounts. (4 Marks)

2. At 1-1-06, the allowance for uncollectible Accounts for Jambo Ltd. Had a credit balance of Shs.30,000 and at 31-12-05, the Accounts Receivable amounted to Shs.850,000

Age of debts Amount Estimated of collectible

Shs.

0 - 30 days 380,000 99%

31 - 60 days 300,000 95%

61 - 90 days 100,000 90%

91 - 120 days 50,000 80%

Over 120 days 20,000 75%

REQUIRED

1. Calculate the allowance for uncollectible accounts required at 31-12-06 (6 Marks)

2. Show the adjusting entry necessary at 31-12-06 (2 Marks)

Highlight three shortcomings off the periodic inventory system and indicate the circumstances under which the system is appropriate for use

QUESTION TWO

1. Highlight two weeknesses of direct write offs of uncollectible accounts. (4 Marks)

2. At 1-1-06, the allowance for uncollectible Accounts for Jambo Ltd. Had a credit balance of Shs.30,000 and at 31-12-05, the Accounts Receivable amounted to Shs.850,000

Age of debts Amount Estimated of collectible

Shs.

0 - 30 days 380,000 99%

31 - 60 days 300,000 95%

61 - 90 days 100,000 90%

91 - 120 days 50,000 80%

Over 120 days 20,000 75%

REQUIRED

1. Calculate the allowance for uncollectible accounts required at 31-12-06 (6 Marks)

2. Show the adjusting entry necessary at 31-12-06 (2 Marks)

Highlight three shortcomings off the periodic inventory system and indicate the circumstances under which the system is appropriate for use