ACC 300 Lecture Notes - Lecture 4: Vale Limited, Computer-Aided Technologies, Walgreens
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Adham Sdn. Bhd. accounts for its uncollectible accounts usingthe allowance method. The company reported the following accountbalances at 31 December 2017.
RM | |
Accounts receivable | 250,000 |
Less: Allowance for doubtful accounts | 12,500 |
During the year 2017, the company had the following transactionsrelated to receivables.
RM | |
1.Credit sales | 600,000 |
3.Collections of accounts receivable | 680,000 |
4.Write-offs of accounts receivable | 10,800 |
5.Recovery of bad debts previously written off | 3,000 |
Required:
a) Journalise transactions 1 - 5 above.
b) Post the entries to the two accounts: Accounts receivable andAllowance for doubtful account.
c) Record the bad debt expense for 2017 (in T-account) undereach of the following independent assumptions:
i. The company estimates its bad debt expense based on 5% ofoutstanding account receivable balance.
ii. The company bad debt estimate is 1% of its credit sales.
d) What is the net realisable value of Accounts Receivable at 31December 2017 under assumption (i) above.