The following transactions relate to the business of Penrith Produce Ltd. Ignore GST.
June 30 Based on past experience, it was estimated that 1% of the year’s net credit sales revenue of $330 000 will not be collected, and an allowance for doubtful debts was established.
Oct. 5 After a concerted effort to collect, an account receivable of $550 from M. McGrathwas written off as a bad debt.
Nov. 15 M. McGrath unexpectedly paid $242 of the amount of his debt written off on 5 October.
- Record the transactions in general journal form.
- What is the balance in the Allowance for Doubtful Debts accounts and the Bad Debts Recovered account? Where are these accounts shown on the financial statements?
On 30 June, the end of its financial year, Burnside Consulting completed an age analysis of its accounts receivable and determined that an allowance for doubtful debts of $12,320 was needed in order to report accounts receivable at their estimated collectable amount in the balance sheet. Ignore GST.
- Prepare the entry to record bad debts expense assuming that the Allowance for Doubtful Debts account currently has a $1940 credit balance.
- Prepare the entry to record bad debts expense assuming that the Allowance for Doubtful Debts account currently has a $820 debit balance.
- Prepare the entry to write off an account receivable from G. Smith for $781.
- Assume that before the entry recorded in requirement C above, the net amount of accounts receivable was $99 000. What is the net amount receivable from accounts receivable after recording the write-off of Smith’s account? Explain.
The following information relates to the cash position of Carl Frasier, loan broker.
- Cash at Bank account balance as at 30 June 2019: $45 466 debit.
- Bank statement balance as at 30 June 2019: $47 512 credit.
- 30 June receipts amounting to $1830 have not been deposited.
- Cheques issued but not presented total $3468.
- A $312 cheque was returned marked ‘dishonoured’. The cheque had been received from J. Simms, a new customer.
- A $750 deposit made by L. Richards was incorrectly credited to the bank account of Carl Frasier.
- The bank statement shows that the bank has charged the business’s account with fees and charges of $30.
- Items 4, 5, and 6 have not yet been entered in the cash journals.