RM 200,000 6,000 Account Receivable Provision for doubtful debt On 30 June 2019, the following adjustment have to be made: i. Debts of RM500 are to be written off as bad ii. One of the entities with accounts receivable whose debts had previously been written off as bad sent a cheque for RM1,000 in full settlement of the amount owed iii. Provision for doubtful debts is 2% of the outstanding accounts receivables Required: For the year ending 30 June 2019 show the: a) Provision for doubtful debts account b) Statement of Profit or Loss (extract) c) Statement of Financial Position (extract)

RM 200,000 6,000 Account Receivable Provision for doubtful debt On 30 June 2019, the following adjustment have to be made: i. Debts of RM500 are to be written off as bad ii. One of the entities with accounts receivable whose debts had previously been written off as bad sent a cheque for RM1,000 in full settlement of the amount owed iii. Provision for doubtful debts is 2% of the outstanding accounts receivables Required: For the year ending 30 June 2019 show the: a) Provision for doubtful debts account b) Statement of Profit or Loss (extract) c) Statement of Financial Position (extract)

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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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

1. kgogo Trading has the following account balances as at 30 June 2019.
RM
200,000
6,000
Account Receivable
Provision for doubtful debt
On 30 June 2019, the following adjustment have to be made:
i. Debts of RM500 are to be written off as bad
ii. One of the entities with accounts receivable whose debts had previously been
written off as bad sent a cheque for RM1,000 in full settlement of the amount
owed
iii. Provision for doubtful debts is 2% of the outstanding accounts receivables
Required:
For the year ending 30 June 2019 show the:
a) Provision for doubtful debts account
b) Statement of Profit or Loss (extract)
c) Statement of Financial Position (extract)

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