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)

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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