Question

Prepare the adjustment entry as of 30/06/2012 under the following

E.            According to the balance sheet, the inventory was $223,500. At the end of the financial year stock take, you have been advised that the inventory value is only $210,000.

F.           On 30/06/2012, the company aged receivables which have a total of $306,400. The company estimated       2% of 90 days receivable and 10% of over 90 days will not be able to be collected.

Aged Receivable Summary 30/6/2013
Total Due	0-30 days	31-60 days	61-90 days	91-120 days
$311,400	$220,000	$60,000	$18,000	$16,400

Answer 1

Ans:    30.06.2018 is the end of the year for the preparation of Balance sheet

Journal Entries

Date	Particulars		Dr.($)	Cr.($)
30.06.2018	Loss on Inventory Valuation A/c   Dr.         To Inventory A/c (being entry for diminution in value of inventory)	$223,500 - $210,000	13,500	13,500
30.06.2018	Profit and Loss A/c Dr.     To Loss on Inventory Valuation A/c (Being entry for transferring loss on Inventory Valuation to Profit and loss A/c )		13,500	13,500
30.06.2018	Profit and Loss A/c Dr.       To Provision of Doubtful Debts A/c ( Being entry for Provision of Doubtful Debts created)		2,000	2,000

Provision for Doubtful Debt to be Created

Age	Amount ($)	Percentage of Amount not collectible	Provision to be created ($)
61-90	18,000	2%	360
91-120	16,400	10%	1,640
Total			2,000