Question

In: Accounting

In a new business during the year ended 31 December 2019 the following debts are found...

In a new business during the year ended 31 December 2019 the following debts are found to be bad and are written-off on the dates shown below:

31 Jan              S. Seal & Son              $800

31 July             H. Halt Ltd                 $500

31 Oct            A.Alice                        $300

On 31 December 2019 the schedule of remaining accounts receivable totaling $20,000 is examined and it is decided to make an allowance for doubtful debts of $700.

Required:

  1. Bad Debts Account for the year ended 31 December 2019.             

  1. Allowance for Doubtful Debts Account for the year ended 31 December 2019.

  1. Extract from the Statement of Profit or Loss for the year ended 31 December 2019.

  1. Extract from the Statement of Financial Position as at 31 December 2019.

Solutions

Expert Solution

a. Bad Debt Accounts
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 Debts Account
To provision for Doubtful debts A/c 700
By Balance C/d 700
700 700
a. Extracts of Statement of Profit and Loss A/c
To Bad Debts A/c 1600
To Doubt ful Debts 700
a. Extracts of Statement of Financial Position as at 31 December 2019
Provision for Doubt Ful Debts 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 Receivable Remianing 20000 ( After Deducting Bad Debt)
700

ekkarill92 answered 2 years ago
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