The gst rate is 10%

QUESTION 6 [9 + 5 + 4 = 18 marks] Smart Builder is registered for GST in Australia and provides renovation services to corporate customers on credit terms. The business uses the aging of accounts receivable method to account for bad debts. An extract of its balance sheet at 1 December 2021 showed: Current Assets Accounts Receivable $550,000 Less Allowance for Doubtful Debt ($100,000) Net Receivable $450.000 Accounting records also showed: Total net credit sales for the year ended 31 December 2021 amounted to $6,500,000 plus GST. Cash collections for the same financial year amounted to $6,600,000. REQUIRED: Show all workings and explanations to secure maximum marks. a. A cheque of $23,870 received from Leo Holdings on 31 December 2021 as payment in full for the debt that was written off as bad debts earlier in the financial year. i. Using the Accounts Receivable Subsidiary Ledger Method, prepare Smart Builder's general journal. Provide a narration to explain each journal entry. [6 marks] ii. If the journal entry in part i. above was NOT recorded, explain how the omission of the journal entry would affect the overstatement/ understatement of Smart Builder's assets and equity (Maximum 100 words). [3 marks] b. If actual bad debts written off for the year ended 31 December 2021 amounted to $99,000 inclusive GST, prepare Smart Builder's Accounts Receivable Control ledger account (in T-format) to include all the above transactions and close the account for the year. [5 marks] c. The management decided that the Allowance for Doubtful Debt account balance for the 2021 financial year end is to be adjusted to 10% of the Accounts Receivable closing balance after all the above transactions. Prepare the general journal to record the estimated bad debt expense to adjust the Allowance for Doubtful Debts at 31 December 2021. Narrations are NOT required. [4 marks]