As part of the review of her business Rita has been looking into what she is owed byvarious customers and how many debts are outstanding. Rita has been able to gatherthe following information about her customers and credit sales. Rita has reached out toan old University friend to get some advice about the likelihood of the amounts owed toher being uncollectible.Age of Customer DebtAmounts owedEstimate of % that(including GST)will not be collected.1-30 days overdue14,107.505%31– 180 days overdue6,204.0016 %181 – 365 days overdue2,458.5025 %1 year + overdue517.00100 %23,287.00Perfect Cover Insurance Brokers sales data for the past year isCredit Sales and Commissions$42,900$11,600$ 2,400(returns are only available on credit sales)Cash Sales and CommissionsSales ReturnsIndustry data shows that 5% of credit transactions are likely to go bad.Rita has also informed you that the current balance in her allowance for doubtful debtsaccount is 500 Dr after a recent bad debt write off.Required:a) Prepare the journal entries to adjust to adjust the Allowance forDebts at 30 June under:Doubtfuli.The net credit sales methodii.The ageing of accounts receivable method.b) Determine the balance in the allowance for doubtful debts account under bothABCmethods.

Name: As part of the review of her business Rita has been looking into what
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Description: As part of the review of her business Rita has been looking into what she is owed byvarious customers and how many debts are outstanding. Rita has been able to gatherthe following information about her customers and credit sales. Rita has reached ou

Answer a (i) Journal Entry Account Titles and Explanations Debit Credit Bad Debts…

Answered: Age of Customer Debt Amounts owed…

Business

Accounting

Age of Customer Debt Amounts owed Estimate of % that (including GST) will not be collected. 1-30 days overdue 14,107.50 5% 31- 180 days overdue 6,204.00 16 % 181 - 365 days overdue 2,458.50 25 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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