Question
Ten Ton Hammer Limited, which started trading on 1 July 2016, adjusted its allowance for doubtful debts at the end of each year on a
Ten Ton Hammer Limited, which started trading on 1 July 2016, adjusted its allowance for doubtful debts at the end of each year on a percentage basis. The following details are available for the three years ended 30 June 2017, 2018 and 2019.
During the year ended 30 June 2017 Block Ltd, whose debt of 3,000 was written off as bad in May 2017 when they entered administration, settled their account in full. Debts for various small debtors amounting to 1,750, written off during 2017, were paid in full in the year ended 30 June 2018. During the year ended 30 June 2019 Realize Ltd, whose 2,500 debt was written off as bad in 2018, paid 50% of the total amount due.
2017-
Bad debts written off year to 30 June (5000)
Accounts receivable at 30 June after bad debts written off and recovered (95,000)
Percentage allowance for doubtful debts (3)
2018-
Bad debts written off year to 30 June (7500)
Accounts receivable at 30 June after bad debts written off and recovered (112000)
Percentage allowance for doubtful debts (5)
2019-
Bad debts written off year to 30 June (4000)
Accounts receivable at 30 June after bad debts written off and recovered (115000)
Percentage allowance for doubtful debts (4)
Question -
For each of the three years you are required to show the following:
- a)The Bad Debts Account.
- b)The Bad Debts Recovered Account.
- c)The Allowance for Doubtful Debts Account.
- d)An extract from the Income Statement.
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