In a new business during the y
In a new business during the year ended 31 December 2019 thefollowing debts are found to be bad and are written-off on thedates shown below:
31Jan S. Seal &Son $800
31July H. HaltLtd $500
31 Oct A.Alice $300
On 31 December 2019 the schedule of remaining accountsreceivable totaling $20,000 is examined and it is decided to makean allowance for doubtful debts of $700.
Required:
- Bad Debts Account for the year ended 31 December2019.
- Allowance for Doubtful Debts Account for the year ended 31December 2019.
- Extract from the Statement of Profit or Loss for the year ended31 December 2019.
- Extract from the Statement of Financial Position as at 31December 2019.
Answer:
| a. | Bad DebtAccounts | ||||
| To S. Seal & SonsA/c | 800 | ||||
| To H. Halt Ltd. A/c | 500 | ||||
| To A. Alice A/c | 300 | ||||
| By P and L A/c | 1600 | ||||
| 1600 | 1600 | ||||
| a. | Doubtful DebtsAccount | ||||
| To provision for Doubtful debtsA/c | 700 | ||||
| By Balance C/d | 700 | ||||
| 700 | 700 | ||||
| a. | Extracts of Statement ofProfit and Loss A/c | ||||
| To Bad Debts A/c | 1600 | ||||
| To Doubt ful Debts | 700 | ||||
| a. | Extracts of Statement ofFinancial Position as at 31 December 2019 | ||||
| Provision for Doubt FulDebts | 700 | Account receivable 21600 | 19300 | ||
| Less: Bad Debts 1600 | |||||
| Less: Doubtful Debts 700 | |||||
Working Notes:
| Name of the Debtor | Amount if Bad Debt | ||
| S. Seal & Son | 800 | ||
| H. Halt Ltd. | 500 | ||
| A. Alice | 300 | ||
| 1600 | |||
| 21600 | |||
| Account ReceivableRemianing | 20000 | ( After Deducting BadDebt) | |
| 700 |
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