ACC10008: Financial Information Systems

Topic 8 – Receivables

Solution to tutorial question

Problem 12.13

A.
July 18 Allowance for Doubtful Debts $520
GST Payable/Collected 52
Accounts Receivable – F. Forrest $572
Wrote off bad debt.

Oct. 19 Accounts Receivable – K. Mears 1,650

Bad Debts Recovered 1,500
GST Payable/Collected 150
Bad debt recovered.

Oct. 19 Cash at Bank 1,650

Accounts Receivable – K. Mears 1,650
Cash received from debtor.

Jan. 31 Cash at Bank (880 x40%) 352

Allowance for Doubtful Debts 480
GST Payable/Collected 48
Accounts Receivable – B. Blanck 880
Amount received, and wrote off remainder as a bad
debt.

alternatively
Cash at Bank (880 x 40%) 352
Accounts Receivable – B. Blanck 352

Allowance for Doubtful Debts 480

GST Payable/Collected 48
Accounts Receivable – B. Blanck (880 x 60%) 528

Feb. 16 Allowance for Doubtful Debts 5,500

GST Payable/Collected 550
Accounts Receivable – Denis Co. Ltd 2,530
Accounts Receivable – H. Howard 3,520
Wrote off bad debts.

alternatively
Allowance for Doubtful Debts 2,300
GST Payable/Collected 230
Accounts Receivable – Denis Co. Ltd 2,530

Allowance for Doubtful Debts 3,200

GST Payable/Collected 320

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 Accounts Receivable – H. Howard 3,520

Mar. 20 Cash at Bank (1584 x 25%) 396

Allowance for Doubtful Debts 1,080
GST Payable/Collected 108
Accounts Receivable – JB Plumbers 1,584
Amount received and wrote off remainder as a bad
debt.

alternatively
Cash at Bank (1584 x 25%) 396
Accounts Receivable – JB Plumbers 396

Allowance for Doubtful Debts 1,080

GST Payable/Collected 108
Accounts Receivable – JB Plumbers(1584x75%) 1,188

Apr. 16 Accounts Receivable – G. Digby 1,067

Bad Debts Recovered 970
GST Payable/Collected 97
Bad debt recovered.

Apr. 16 Cash at Bank 1,067

Accounts Receivable – G. Digby 1,067
Cash received from debtor.

June 30 Bad Debts Expense 9,465

Allowance for Doubtful Debts 9,465
End-of-period adjustment. (631,000x 1.5%)

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B.
1.
Balance in the allowance account after 30 June
adjustment:
Beginning balance $9,300
Less: Debits to the account during the year 7,580
Add: Credits to the account during the year —
End-of-period adjustment 9,465
Ending balance $11,185

OR

Date Account Debit Credit Balance

1 July Balance 9,300 Cr
18 July Acccts Receivable-F. Forest 520 8,780 Cr
31 Jan Accts Receivable-B. Blanck 480 8,300 Cr
16 Feb Accts Receivable-Denis Co Ltd/H. Howard 5,500 2,800 Cr
20 Accts Receivable-JB Plumber 1,080 1,720 Cr
March
30 June Bad Debts expense 9,465 11,185 Cr

2.
Expected realisable value of accounts receivable:
30 June balance of accounts receivable $189,200
Less: Allowance for doubtful debts 11,185
Expected realisable value $178,015

C.
1. Balance at beginning $9,300 Cr
Less total debits 7,580
Plus total credits 0
1,720 Cr
Expected balance at end 11,630 Cr
Adjustment required 9,910End of period adjustment required
9,910 Cr
Desired ending balance 11,630 Cr

alternatively
Date Account Debit Credit Balance
1 July Balance 9,300 Cr
18 July Acccts Receivable-F. Forest 520 8,780 Cr
31 Jan Accts Receivable-B. Blanck 480 8,300 Cr
16 Feb Accts Receivable-Denis Co Ltd/H. Howard 5,500 2,800 Cr
20 Accts Receivable 1,080 1,720 Cr
March
30 June Bad Debts expense 9,910 11,630 Cr

2.
Expected realisable value of accounts receivable:
30 June balance of accounts receivable $189,200
Less: Allowance for doubtful debts 11,630

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Expected realisable value $177,570

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