Question

Question 2 The CEE NEE Cosmetics Sdn Bhd provides cosmetics and beauty products for Malaysia market. During 2019, the company sold products of RM400,000 on account. Of this amount. RM50,000 remains uncollected at the end of the year (31" December 2019). The company estimated 0.3% of credit sales can not be collected. Required: a) Calculate the amount for uncollectible (2 marks) b) On 1" April 2019, a customer's account balance of RM600 is written off as uncollectible. Record the write-off. (2 marks) c) Record the 31" December 2019, adjusting entry, assuming the balance of the allowance account before adjusting entries is RM400 (credit) (3 marks) d) Show the receivables balance in the Statement of Financial Position as at 31 December 2019. (3 marks)

Answer 1

a) Calculation of the amount for uncollectible:

Using the percentage of sales method, Company estimated that 0.3% of their credit sales would be uncollectible

Credit sale for 2019 is RM400,000

0.3% on RM400,000 is RM1200

b) Journal entry for record the write off of RM600 as uncollectible.

Date	Ledgers	Debit	Credit
01-Apr-2019	Allowance for Doubtful Accounts	600
	Accounts Receivables		600

c) Journal entry:

Date	Ledgers	Debit	Credit
31-Dec-2019	Bad Debts	800
	Allowance for Doubtful Accounts		800

Workings:

Description	Amount
Uncollectible amount for 2019	RM 1200
Less: Allowance account balance	RM 400
Net uncollectible amount to be recorded	RM800

d) Receivable balance in the statement of Financial position on 31st December 2019.

Description	Amount
Account Receivable	RM400,000
Less: Allowance for Doubtful Accounts	RM50,000
Net Account Receivables	RM350,000