On 1 January 2020, Milkybar Ltd reported an Accounts Receivable balance of $179,000 and an Allowance...

On 1 January 2020, Milkybar Ltd reported an Accounts Receivable balance of $179,000 and an Allowance for Doubtful Debts credit balance of $8,700. The following transactions and adjustments were recorded during the year ended 31 December 2020 (ignore GST):

(i) Cash sales were $235,000 and credit sales were $820,000 for the year.

(ii) Total accounts receivable collections were $762,000.

(iii) A total of $29,600 of accounts receivable was written off as uncollectable during the year.

(iv) At year end, an adjustment was made using the percentage of credit sales method. Impaired receivables were estimated to be 4% of credit sales.

(v) A review by management determined that a further adjustment should be prepared (in addition to (iv) above). This review of accounts receivable balances, based on the percentage of receivables method, indicated that $14,200 of the accounts receivable at 31 December are estimated to be uncollectable.

Required:

(a) Prepare general journal entries for each of the above items. (Explanations not required)

(b) If a business is registered for the GST will the amounts posted to the accounts receivable subsidiary ledger include or exclude GST? Explain. (1 mark)

Expert Solution

ekkarill92 answered 1 year ago

1. The balance sheet at the end of 2018 reported Accounts Receivable of $785,500 and Allowance...

1. The balance sheet at the end of 2018 reported Accounts Receivable of $785,500 and Allowance for Doubtful Accounts of $11,783 (credit balance). The company’s total sales during 2019 were $8,350,200. Of these, $1,252,530 were cash sales the rest were credit sales. By the end of the year, the company had collected $6,291,700 of accounts receivable. It also wrote off an account for $10,380. A.Prepare the journal entry for sales. B. Prepare the journal entry for collections. C. Prepare the...

On January 1, 2020, Novak Corp. had Accounts Receivable $140,800, Notes Receivable $24,000, and Allowance for...

On January 1, 2020, Novak Corp. had Accounts Receivable $140,800, Notes Receivable $24,000, and Allowance for Doubtful Accounts $12,300. The note receivable is from Willingham Company. It is a 4-month, 9% note dated December 31, 2019. Novak Corp. prepares financial statements annually at December 31. During the year, the following selected transactions occurred. Jan. 5 Sold $18,200 of merchandise to Sheldon Company, terms n/15. 20 Accepted Sheldon Company’s $18,200, 3-month, 8% note for balance due. Feb. 18 Sold $6,400 of...

At January 1, 2021, Tanner Company reported accounts receivable of $262,750 and had an allowance for...

At January 1, 2021, Tanner Company reported accounts receivable of $262,750 and had an allowance for doubtful accounts with a $13,690 credit balance. During 2021, Tanner Company had sales revenue of $531,250, recoveries of $6,190, cash collections from credit customers of $493,580 (the $493,580 does not include the recovery), and bad debt expense of $20,870. During 2021, Tanner Company wrote-off accounts receivable as being uncollectible (note - the amount of the write-offs has been intentionally omitted from this problem). At...

As of December 31, 2020, Gill Co. reported accounts receivable of $226,000 and an allowance for...

As of December 31, 2020, Gill Co. reported accounts receivable of $226,000 and an allowance for uncollectible accounts of $8,600. During 2021, accounts receivable increased by $22,500, (that change includes $7,700 of bad debts that were written off). An analysis of Gill Co.'s December 31, 2021, accounts receivable suggests that the allowance for uncollectible accounts should be 1% of accounts receivable. Bad debt expense for 2021 would be: Multiple Choice · $1,585. · $7,700. · $2,485. · None of these...

Jr-6Wq Company reported the following account balances at January 1, 2039: accounts receivable ................ $246,822 allowance...

Jr-6Wq Company reported the following account balances at January 1, 2039: accounts receivable ................ $246,822 allowance for bad debts ............ $ 25,155 During 2039, Jr-6Wq Company wrote-off as uncollectible accounts receivable totaling $41,797. At December 31, 2039, Jr-6Wq Company prepared the following aging schedule: Accounts Receivable % Uncollectible not past due $225,200 2% 1-2 months past due 136,900 6% 3-4 months past due 83,120 10% 5-6 months past due 55,610 20% over 6 months past due 26,700 39% Calculate Jr-6Wq...

At January 1, 2020, the credit balance of Cheyenne Corp.’s Allowance for Doubtful Accounts was $406,500....

At January 1, 2020, the credit balance of Cheyenne Corp.’s Allowance for Doubtful Accounts was $406,500. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $80 million, of which 89% were on account. Based on the information available at the time, the 2020 bad debt expense was estimated to be 0.80% of net credit sales. During 2020, uncollectible receivables amounting to $500,000 were written off against the allowance...

ABC Company reported accounts receivable of $225,000 and an allowance for doubtful accounts with a $28,000...

ABC Company reported accounts receivable of $225,000 and an allowance for doubtful accounts with a $28,000 credit balance on January 1, 2017. ABC Company records bad debt expense using the net credit sales method. The following information was available for ABC Company for the years 2017 and 2018: 2017 2018 Cash collections from customers ? 275,870 Recoveries 3,600 6,760 Net realizable value at December 31 127,180 154,240 Accounts receivable turnover ratio 2.4 1.80 Sales revenue 468,000 ? % of sales...

Pierce Corporation reported a $3,600 balance in accounts receivable on January 1, 2014. During the year,...

Pierce Corporation reported a $3,600 balance in accounts receivable on January 1, 2014. During the year, $24,800 of sales on account were made. During the year, Price wrote off accounts receivable of $1,700 as uncollectible. If the ending balance of accounts receivable is $2,000, what is the amount of cash received from customers?

On 1 July 2020 Tran’s Hardware Pty Ltd had an accounts receivable ledger balance of $75,000...

On 1 July 2020 Tran’s Hardware Pty Ltd had an accounts receivable ledger balance of $75,000 debit and a credit balance in the allowance for doubtful debts ledger account of $15,000. On 3 July Tran’s was contacted by Nails and Hammers Pty Ltd to notify that the business had been declared bankrupt and that they would not be able to pay the $5,500 owing to Tran’s Hardware from a previous credit sale made to them in June 2020. The business...

At December 31, Gill Co. reported accounts receivable of $274,000 and an allowance for uncollectible accounts...

At December 31, Gill Co. reported accounts receivable of $274,000 and an allowance for uncollectible accounts of $1,500 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 1% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: $1,500. $1,240. $2,740. $950.

Question