Question

Below is the Debtors ageing analysis of GOMA LTD as at the year ending 31/12/2018

Total 2 years and above More than 1yr Less than 2 yrs 6 months to 1yr More than3mths, less than 6 mths 3 month and below Debtors GH₵ GH₵ GH₵ GH₵ GH₵ GH₵ NNM LTD 38,000 14,000 8,000 6,000 10,000 RPTY LTD 54,000 20,000 5,000 8,000 21,000 JJMT LTD 30,000 5,000 10,000 12,000 3,000 KPOY LTD 24,000 10,000 6,000 8,000 RATMAN LTD 23,000 9,000 5,000 6,000 3,000 WHENT LTD 25,000 4,000 8,000 6,000 7,000 POMOTY LTD 89,000 5,000 20,000 30,000 20,000 14,000 RANCH LTD 25,000 7,000 4,000 6,000 8,000 YOU LTD 43,000 12,000 15,000 16,000 NANCY LTD 67,000 4,000 10,000 24,000 29,000 DASE 61,000 4,000 10,000 12,000 35,000 VAEG LTD 99,000 10,000 8,000 51,000 30,000 ADANSE LTD 34,000 27,000 7,000 KOMA LTD 43,000 14,000 29,000 WERET LTD 70,000 4,000 20,000 16,000 20,000 10,000 GOMT LTD 5,000 5,000 THIN LTD 109,000 3,000 50,000 50,000 6,000 NOMAN LTD 73,000 4,000 10,000 50,000 9,000 WOGAN LTD 7,000 7,000 CMMT LTD 470,000 10,000 60,000 50,000 350,000

GOMA LIMITED - DEBTORS AGE ANAYLSIS SHEET AS AT 31/12 2018

TOTAL                1,389,000       127,000             232,000         141,000           371,000       518,000

After a review of the Debtors Ageing Analysis it was agreed as follows

1. 2 years and above
2. a) 50% of balances falling in the above period of the undermentioned debtors should be written of

NNM LTD

RPTY LTD

YOU LTD

NOMAN LTD

CMMT LTD

1. b) 100% of balances falling in the above period of the undermentioned debtors should be written of

GOMT LTD

WOGAN LTD

1. More than 1yr Less than 2 yrs

20% of balances falling in the above period of the undermentioned debtors should be written off.

JJMT LTD

POMOTY LTD

NANCY LTD

1. More than 3mths, less than 6 mths

Due to some defect in some goods sold the following balances are to be written off

VAEG LTD GH₵10,000

KOMA LTD GH₵2,000

1. Specific provisions should be made on the following balances

RATMAN LTD            GH₵2,000

RANCH LTD              GH₵2,000

ADANSE LTD            GH₵3,000

1. A 10% general provision should be made on all outstanding balances
2. Balance on the provision for Bad Debts Account as at 1/1/2018 was GH₵ 80,000

Required

1) Adjust and Prepare the Debtors Ageing analysis Sheet and determine

i) Total balance for 2 years and above

ii) Total balance on More than 1yr Less than 2 yrs

iii) Total balance on 6 months to1yr  

iv) Total balance on More than 3mths, less than 6 mths

2) Determine the Bad Debt to be charged to the Profit and Loss Account

3) Determine the Provision for Bad Debts to be charged to the Profit and Loss Account

4) Prepare the Balance Sheet Extracts for Debtors and Provision for Bad Debts under Current Assets as at 31/12/2018.

Answer 1

Solution (1)	(i) Total balance
	2 years	Written off %	Amount written off	Balance
	and above
Debtors	GH₵
NNM LTD	14,000	50%	7,000	7,000
RPTY LTD	20,000	50%	10,000	10,000
JJMT LTD	5,000		0	5,000
KPOY LTD	10,000		0	10,000
RATMAN LTD	9,000		0	9,000
WHENT LTD	4,000		0	4,000
POMOTY LTD	5,000		0	5,000
RANCH LTD	7,000		0	7,000
YOU LTD	12,000	50%	6,000	6,000
NANCY LTD	4,000		0	4,000
DASE	4,000		0	4,000
VAEG LTD			0	0
ADANSE LTD			0	0
KOMA LTD			0	0
WERET LTD	4,000		0	4,000
GOMT LTD	5,000		0	5,000
THIN LTD	3,000		0	3,000
NOMAN LTD	4,000	50%	2,000	2,000
WOGAN LTD	7,000		0	7,000
CMMT LTD	10,000	50%	5,000	5,000
	1,27,000		30,000	97,000
	(ii) Total balance
	More than	Written off %	Amount written off	Balance
	1yr Less than
	2 yrs
NNM LTD	8000		0	8,000
RPTY LTD	5000		0	5,000
JJMT LTD	10000		0	10,000
KPOY LTD			0	0
RATMAN LTD			0	0
WHENT LTD			0	0
POMOTY LTD	20000		0	20,000
RANCH LTD	4000		0	4,000
YOU LTD	15000		0	15,000
NANCY LTD	10000		0	10,000
DASE	10000		0	10,000
VAEG LTD	10000		0	10,000
ADANSE LTD			0	0
KOMA LTD			0	0
WERET LTD	20000		0	20,000
GOMT LTD		100%	0	0
THIN LTD	50000		0	50,000
NOMAN LTD	10000		0	10,000
WOGAN LTD		100%	0	0
CMMT LTD	60000		0	60,000
	2,32,000		0	2,32,000
	(iii) Total balance
	6 months	Written off %	Amount written off	Balance
	to 1yr
NNM LTD	6,000		0	6,000
RPTY LTD	8,000		0	8,000
JJMT LTD	12,000	20%	2400	9,600
KPOY LTD	6,000		0	6,000
RATMAN LTD	5,000		0	5,000
WHENT LTD	8,000		0	8,000
POMOTY LTD	30,000	20%	6000	24,000
RANCH LTD	6,000		0	6,000
YOU LTD			0	0
NANCY LTD	24,000	20%	4800	19,200
DASE	12,000		0	12,000
VAEG LTD	8,000		0	8,000
ADANSE LTD			0	0
KOMA LTD			0	0
WERET LTD	16,000		0	16,000
GOMT LTD			0	0
THIN LTD			0	0
NOMAN LTD			0	0
WOGAN LTD			0	0
CMMT LTD			0	0
	1,41,000		13,200	1,27,800
	(iv) Total balance
	More	Written off %	Amount written off	Balance
	than3mths, less than 6 mths
NNM LTD	10,000			10,000
RPTY LTD	21,000			21,000
JJMT LTD	3,000			3,000
KPOY LTD	8,000			8,000
RATMAN LTD	6,000		2,000	4,000
WHENT LTD	6,000			6,000
POMOTY LTD	20,000			20,000
RANCH LTD			2,000	-2,000
YOU LTD				0
NANCY LTD				0
DASE	35,000			35,000
VAEG LTD	51,000		10,000	41,000
ADANSE LTD	27,000		3000	24,000
KOMA LTD	14,000		2,000	12,000
WERET LTD	20,000			20,000
GOMT LTD				0
THIN LTD	50,000			50,000
NOMAN LTD	50,000			50,000
WOGAN LTD				0
CMMT LTD	50,000			50,000
	3,71,000		19,000	3,52,000
Solution(2)
	Total bad debts to be charged to profit and loss account	62200
Solution(3)	Provision fo bad debts to be charged to profit and loss account	80000
Solution(4)	Extract of balance sheet
		Amount	Amount
	Opening receivables		1389000
	Provision :
	Opening balance of provision of doubtful debts	80000
	Add: Provision created	138900
	Less: Bad debts	-62,200	-156700
	Balance of debtors		1232300
	Balance sheet
			Amount
	Current asset
	Account receivables	1389000
	Provision for doubtful debts	-156700	1232300