Part (a)
1. Inventory:- Cost or Net Realizable Value, whichever is less
where,
Cost = Purchase Cost + any other costs incurred to bring inventory to its present condition
NRV = Expected selling price ‘less’ cost of disposal
2. Patents (Intangible Assets);- Acquisition/Purchase cost, and is annually tested for impairment
3. Plant and Equipments (Fixed Assets):- Recorded at cost, including any costs necessary to make the assets ready for use.
Such cost is then allocated to the income statement over the life of the asset as Depreciation.
Part B
Impairment Loss = (360000*1%) + (50000*2%) + (90000*10%) + (100000*20%) = $33600
Adjusting Entry
Allowance for Impairment A/c Dr. 33600
To Account Receivables 33600
Part C
Net credit sales = 80% of $1,400,000 = $1,120,000
Estimated Un-collectible Receivables = 1% of $1,120,000 = $11,200
Adjusting Entry
Allowance for Impairment A/c Dr. 11200
To Account Receivables 11200
Part D
3 Feb 2019
Bad Debts A/c Dr. 3000
To Account Receivables 3000
P&L A/c Dr. 3000
To Bad Debts 3000
Pretty Pet Shop had the following unadjusted account balance as at 31 December 2018. Debit Credit...
Question B2 The trial balance as at 31 December 2018 of Beauty Cosmetics Company (“Beauty Cosmetics”) included the following accounts: Accounts receivable at 31 December 2018 $90,000 Allowance for impairment $10,700 (Dr) During 2019, total sales amounted to $1,200,000, of which 70% was credit sales. Total receipts from credit customers were $600,000. Besides, $61,000 of accounts receivables was proven to be uncollectible and were written off. At the end of the year, an aging of the accounts receivable indicated the...
2. Broadway Limited had an $800 credit balance in Allowance for Doubtful Accounts at December 31, 2018, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following (10 marks): Estimated Percentage Uncollectible Current Accounts........................................... $150,000 1% 1-30 days past due.............................................. 15,000 3% 31-60 days past due.............................................. 8,000 6% 61-90 days past due.............................................. 5,000 12% Over 90 days past due.................................... 6,000 30% Total Accounts...
First Landing Golf Club Trial Balance December 31, 2018 Unadjusted Debit Credit Cash 15,000 Accounts Receivable - Members 13,000 Allowance for Doubtful Accounts 1,100 Rent Receivable - Prepaid Insurance 9,000 Shop Supplies 3,600 Land 350,000 Buildings 120,000 Accumulated Depreciation - Buildings 40,000 Equipment 150,000 Accumulated Depreciation - Equipment 70,000 Interest Payable Salaries and Wages Payable - Unearned Dues - Note Payable 100,000 Common Stock 300,000 Retained Earnings 82,000 Dues Revenue 200,000...
Reynolds Company has credit sale of $4,500,000 for the year 2018. At December 31, 2018, the company’s Allowance for Doubtful Accounts has an unadjusted credit balance of $3,400. Reynolds prepares a schedule of its December 31, 2018 accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized as follows: DECEMBER 31, 2018 AGE OF EXPECTED PERCENT ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLE UNCOLLECTIBLE $396,400...
Millar Ltd has the following unadjusted trial balance at 31 December 2018. Account titles Debit Credit Cash Accounts receivable Supplies Prepaid insurance Equipment Accumulated depreciation - Equipment Other assets (non-current) Accounts pavable Share capital (3000 shares outstanding all year) Retained profit Service revenue Cost of Goods Sold 19 600 7 000 1 300 900 27 000 12 000 5 100 7 500 16 000 10 300 48 000 32 900 93 800 93 800 Data not yet recorded at 31...
EXERCISE 2 Brown Company had a $1,000 credit balance in Allowance for Doubtful Accounts at December 31, 2020, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: Estimated Percentage Uncollectible Current Accounts $100,000 1% 1–30 days past due 12,000 3% 31–60 days past due 10,000 6% 61–90 days past due 6,000 25% Over 90 days past due 8,000 50% Total Accounts Receivable $136,000 Instructions: (a) Prepare the adjusting entry on December 31, 2020, to recognize bad debts expense. (b) Assume the same facts as above except...
Prepare journal entries to update the accounts regarding to the
above mistakes made by accountant and Prepare the adjusting
entries, with the consideration of the answer in first part above,
for the year if Fama Corporation used the Statement of Financial
Position approach and it estimated $11,000 as uncollectible in
2019. Then, Prepare the adjusting entries for the year if Fama
Corporation used the Income Statement approach and it estimated 2%
of net credit sales would be uncollectible in 2019....
Idul 10S The following information is the cash account and the bank statement of Pretty Pet Shop at 30 June 2019. Pretty Pet Shop Cash account 2019 2019 May 31 Balance 1,410 Jun 5 Check written 180 (no.882) Jun 1-30 Deposits 3,800 Jun 13 Check written 591 (no.883) Jun 16 Check written (no.884) Jun 30 Check written (no.885) Jun 30 Check written 979 Jun (no.886) 30 Balance 2,266 784 HKCC Bank Bank Statement 1,410 662 (180) 894 2019 May 31...
Part Six: Problem. On March 31, 2019, Merle Company had an unadjusted debit balance of $12,350 in its allowance for uncollectible accounts and a $587,400 debit balance in its accounts receivable account. The Company reported net credit sales of $4,500,000 during the first quarter. An analysis of Merle's trade accounts receivable at that date revealed the following: Days Past Due Amount Estimated uncollectible Current S124,000 3% 1-30 days 74.500 7% 31-60 days67,200 12% 61-90 days 45,700 30% Over 90 days...
Question 1: Jaafar Trading Sdn Bhd (JTSB) has has the following ageing schedule as at 31 December 2018 60-90 days Over 91 days Account Receivables Aging Schedule Name Total 1 - 30 days 31-60 days (RM) Total Account 92,500 31,000 34,000 Receivable Estimated 2% 3% uncollectible 21,500 6,000 4% 5% Required: a) What is bad debt? (2 marks) b) Explain 2 reasons why company should allocate some amount for bad debts/uncollectible? (2 marks) c) Calculate the total estimated bad debts...