Question

3 (a). Following is the aging schedule of Zahir Company as of December 31, 2019.    (Marks 6)                                                                  

		Not Yet Due	Days Past Due
Name of Customers	Total Balance		1-30	31-60	61-90	Over 90
Umer Sons	17,100	9,000	5,400	-	2,700	-
Ishaq Brothers	25,200	14,400	-	7,200	-	3,600
YMC Company	3,600	-	3,600	-	-	-
Muna Services	14,400	7,200	-	2,700	4,500	-
Ali Company	23,400	18,000	-	-	-	5,400

The company has estimated 2%, 4%, 20%, 30% and 50% of bad debts in each time category of the account receivables.

You are required to:

1. Compute the amount of estimated uncollectable account.
2. Record the adjusting entry assuming that Allowance for Bad Debts currently has           OMR 6.300 credit balance.
3. Record the adjusting entry assuming that Allowance for Bad Debts currently has        OMR 600 debit balance.

		Not Yet Due	Days Past Due
Name of Customers	Total Balance		1-30	31-60	61-90	Over 90
Total A/c Receivable
Bad Debts Rates
Uncollectable Amount

(ii) Record the adjusting entry assuming that Allowance for bad debts currently has

     OMR 6,300 credit balance.

Allowance for Bad Debts
Account Title	Amount Dr. (OMR	Account Title	Amount Cr. (OMR)
Total		Total

General Journal

Date	Particulars	Debit OMR	Credit OMR

3. Record the adjusting entry assuming that ‘Allowance for bad debts currently has   

        OMR 600 debit balance.

Allowance for Bad Debts
Account Title	Amount Dr. (OMR	Account Title	Amount Cr. (OMR)
Total		Total

General Journal

Date	Particulars	Debit OMR	Credit OMR

Answer 1

• Requirement asked
• [1]

			Not Yet Due	Days Past Due
	Name of Customers	Total Balance		1-30	31-60	61-90	Over 90
A	Total accounts receivables	OMR 83,700	OMR 48,600	OMR 9,000	OMR 9,900	OMR 7,200	OMR 9,000
B	Bad Debts Rates		0%	2%	4%	20%	50%
C = A x B	Uncollectable Amount	OMR 6,516	OMR 0	OMR 180	OMR 396	OMR 1,440	OMR 4,500

[2]

Allowance for Bad Debts
Account Title	Amount Dr. (OMR	Account Title	Amount Cr. (OMR)
		Beg Bal	OMR 6,300
End Bal	OMR 6,516	Bad Debt Expense	OMR 216
Total	OMR 6,516	Total	OMR 6,516
General Journal
Date	Particulars	Debit OMR	Credit OMR
31-Dec-19	Bad Debt Expense	OMR 216
	Allowance for Bad Debts		OMR 216
	(to record and adjust bad debt expense)

[3]

Allowance for Bad Debts
Account Title	Amount Dr. (OMR	Account Title	Amount Cr. (OMR)
Beg Bal	OMR 600
End Bal	OMR 6,516	Bad Debt Expense	OMR 7,116
Total	OMR 7,116	Total	OMR 7,116
General Journal
Date	Particulars	Debit OMR	Credit OMR
31-Dec-19	Bad Debt Expense	OMR 7,116
	Allowance for Bad Debts		OMR 7,116
	(to record and adjust bad debt expense)