ANZ Kitchen Appliances Pty Ltd has the following information for the month ended 30th June 2022: Accounts receivable has a debit balance of $176,550 (including the balance of C. Cathy’s account) at 1 June 2022. Allowance for doubtful debts has credit balance of $11,220 at 1 June 2022. On 15 June, received $3,300 of the account balance of C. Cathy’s of $13,200 and On 16 June, wrote off the remaining balance of C.Cathy’s as a bad debt. On 30 June, estimated bad debts expense for the year to be 2% of net credit sales of $825,000. Required: Prepare general journal entries for the transactions on 15, 16 and 30 June (ignore GST). Assuming that this is the only bad debt written off for the year and this is the only adjustment to the allowance for doubtful debts account, show the information that will appear in the income statement for the year ended 30th June 2022 as a result of the above transactions. Show how accounts receivable will appear in the balance sheet as at 30th June 2022
ANZ Kitchen Appliances Pty Ltd has the following information for the month ended 30th June 2022: Accounts receivable has a debit balance of $176,550 (including the balance of C. Cathy’s account) at 1 June 2022. Allowance for doubtful debts has credit balance of $11,220 at 1 June 2022. On 15 June, received $3,300 of the account balance of C. Cathy’s of $13,200 and On 16 June, wrote off the remaining balance of C.Cathy’s as a bad debt. On 30 June, estimated bad debts expense for the year to be 2% of net credit sales of $825,000. Required: Prepare general journal entries for the transactions on 15, 16 and 30 June (ignore GST). Assuming that this is the only bad debt written off for the year and this is the only adjustment to the allowance for doubtful debts account, show the information that will appear in the income statement for the year ended 30th June 2022 as a result of the above transactions. Show how accounts receivable will appear in the balance sheet as at 30th June 2022
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
ANZ Kitchen Appliances Pty Ltd has the following information for the month ended 30th June 2022:
Accounts receivable has a debit balance of $176,550 (including the balance of C. Cathy’s account) at 1 June 2022.- Allowance for doubtful debts has credit balance of $11,220 at 1 June 2022.
- On 15 June, received $3,300 of the account balance of C. Cathy’s of $13,200 and
- On 16 June, wrote off the remaining balance of C.Cathy’s as a bad debt.
- On 30 June, estimated
bad debts expense for the year to be 2% of net credit sales of $825,000.
Required:
- Prepare general
journal entries for the transactions on 15, 16 and 30 June (ignore GST). - Assuming that this is the only bad debt written off for the year and this is the only adjustment to the allowance for doubtful debts account, show the information that will appear in the income statement for the year ended 30th June 2022 as a result of the above transactions.
- Show how accounts receivable will appear in the balance sheet as at 30th June 2022.
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