19.3 A business started trading on 1 January 2022. During the two years ended 31 December 2022 and 2023, the following debts were written off to the bad debts expense account on the dates stated: 31 May 2022 31 October 2022 31 January 2023 30 June 2023 31 October 2023 J. Gray P. King T. Ryan D. Simms B. Hall £350 £560 £680 £290 £470 On 31 December 2022, the total trade receivables were £97,100. It was decided to make an allowance for doubtful debts of £3,230. On 31 December 2023, the total trade receivables were £106,200. It was decided to make an allowance for doubtful debts of £4,010. You are required to show: i. The allowance for doubtful debts account and the bad debts expense account for each of the two years. ii. The relevant extracts from the balance sheets as at 31 December 2022 and 2023.
19.3 A business started trading on 1 January 2022. During the two years ended 31 December 2022 and 2023, the following debts were written off to the bad debts expense account on the dates stated: 31 May 2022 31 October 2022 31 January 2023 30 June 2023 31 October 2023 J. Gray P. King T. Ryan D. Simms B. Hall £350 £560 £680 £290 £470 On 31 December 2022, the total trade receivables were £97,100. It was decided to make an allowance for doubtful debts of £3,230. On 31 December 2023, the total trade receivables were £106,200. It was decided to make an allowance for doubtful debts of £4,010. You are required to show: i. The allowance for doubtful debts account and the bad debts expense account for each of the two years. ii. The relevant extracts from the balance sheets as at 31 December 2022 and 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:19.3 A business started trading on 1 January 2022. During the two years ended 31 December
2022 and 2023, the following debts were written off to the bad debts expense account on the dates
stated:
31 May 2022
31 October 2022
31 January 2023
30 June 2023
31 October 2023
J. Gray
P. King
T.
Ryan
D. Simms
B. Hall
£350
£560
£680
£290
£470
On 31 December 2022, the total trade receivables were £97,100. It was decided to make an
allowance for doubtful debts of £3,230.
On 31 December 2023, the total trade receivables were £106,200. It was decided to make an
allowance for doubtful debts of £4,010.
You are required to show:
i. The allowance for doubtful debts account and the bad debts expense account for each of the
two years.
ii. The relevant extracts from the balance sheets as at 31 December 2022 and 2023.
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