Sorrento Interior Furnishings Pty Ltd has adopted the Allowance for Doubtful Debts Method. The Allowance for Doubtful Debts as at 1 July 2019 was $7,500 credit (CR). The write-off of bad debts for the 2019 - 2020 financial year was $8,000. The Allowance for Doubtful Debts as at 30 June 2020 was 7% of credit sales. Credit sales for the 2019-2020 financial year was $130,000 (Disregard GST) What is the adjusting entry to raise the Allowance for Doubtful Debts at 30 June 2020? O DR: Bad Debts $9,100 CR: Allowance for Doubtful Debts $9,100 O DR: Bad debts $8,000 & CR: Allowance for Doubtful Debts $8,000 O DR: Accounts Receivable $8,000 & CR: Allowance for Doubtful Debts $8,000 O DR: Bad Debts $9,600 CR: Allowance for Doubtful Debts $9,600

Sorrento Interior Furnishings Pty Ltd has adopted the Allowance for Doubtful Debts Method. The Allowance for Doubtful Debts as at 1 July 2019 was $7,500 credit (CR). The write-off of bad debts for the 2019 - 2020 financial year was $8,000. The Allowance for Doubtful Debts as at 30 June 2020 was 7% of credit sales. Credit sales for the 2019-2020 financial year was $130,000 (Disregard GST) What is the adjusting entry to raise the Allowance for Doubtful Debts at 30 June 2020? O DR: Bad Debts $9,100 CR: Allowance for Doubtful Debts $9,100 O DR: Bad debts $8,000 & CR: Allowance for Doubtful Debts $8,000 O DR: Accounts Receivable $8,000 & CR: Allowance for Doubtful Debts $8,000 O DR: Bad Debts $9,600 CR: Allowance for Doubtful Debts $9,600

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

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Sorrento Interior Furnishings Pty Ltd has adopted the Allowance for
Doubtful Debts Method. The Allowance for Doubtful Debts as at 1 July
2019 was $7,500 credit (CR). The write-off of bad debts for the 2019 -
2020 financial year was $8,000. The Allowance for Doubtful Debts as at
30 June 2020 was 7% of credit sales. Credit sales for the 2019 - 2020
financial year was $130,000 (Disregard GST)
What is the adjusting entry to raise the Allowance for Doubtful Debts at
30 June 2020?
O DR: Bad Debts $9,100 CR: Allowance for Doubtful Debts $9,100
O DR: Bad debts $8,000 & CR: Allowance for Doubtful Debts $8,000
DR: Accounts Receivable $8,000 & CR: Allowance for Doubtful Debts $8,000
O DR: Bad Debts $9,600 CR: Allowance for Doubtful Debts $9,600

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