ACC 1101

TUTORIAL TRADE RECEIVABLES 2

Question 1
At December 31, 2016, Casey Company reports total sales amounted to RM4,500,000, of
which RM500,000 are cash sales and the rest are credit sales. In addition, its unadjusted trial
balance includes the following items:
Accounts receivables................................... RM480,000 debit
Allowance for doubtful accounts................
RM6,500 credit
Amount owed by a debtor, Milky Company, amounted to RM3,000, would most probably be
uncollectible and the company decided to write it off. Bad debt expense is calculated at 0.2%
of credit sales.
A payment of RM2,000 was received from a debtor, Sunlite Company, whose account was
written off last year.
Required:
1. Prepare journal entries to record adjusting entries for uncollectible accounts on the basis
of percent of sales method.
2. Open T-account for Allowance for Doubtful Accounts and post all relevant transactions.
Other accounts are not required.
3. Show how Accounts Receivables and the Allowance for Doubtful Accounts appear on the
companys statement of financial position on December 31, 2016.
Question 2
On September 30, Emerson Co. has RM540,250 of accounts receivable. Emerson uses the
allowance method of accounting for bad debts and has an existing credit balance in the
allowance for doubtful accounts of RM13,750. The following transactions occurred during
October:
a.
b.
c.
d.

Sold RM325,000 of merchandise to customers on credit.

Received RM425,100 cash in payment of accounts receivable.
Wrote off RM16,700 of uncollectible accounts receivable.
In adjusting the accounts on October 31, its fiscal year-end, the company estimated that
3% of accounts receivable will be uncollectible.

Required:
1. Prepare journal entries to record the following selected October transactions.
2. Show how accounts receivable and allowance for doubtful debts accounts appear on its
October 31 statement of financial position.

Question 3
At December 31, 2015, MP Company reports the following results for the year:
Cash sales
Credit sales

RM1,015,000
RM1,241,000

In addition, its unadjusted trial balance includes the following items:

Accounts receivable
Allowance for doubtful debt accounts

RM475,000 debit
RM5,200 credit

There was objective evidence that 9% of a RM50,000 debt owed by a debtor, NB Company,
would most probably be uncollectible. An aging analysis of the rest of the accounts receivable
indicated that as estimated 4% of these accounts would not be collectible.
Required:
1. Prepare the adjusting entry for MP Company to recognise bad debts.
2. Show how Accounts Receivables and the Allowance for Doubtful Accounts appear on the
companys statement of financial position on December 31, 2015.
Question 4
Prepare journal entries to record these selected transactions for Kazen Sdn. Bhd.
Feb 1

Sold goods worth RM6,000 to Mr. Salam on credit. Credit term 3/15, n 60.

May 1

Accepted a RM6,000, 6-month, 8% note dated May 1 from Mr. Salam in

granting a time extension on his past-due trade receivable.

Oct 31

Mr. Salam honors his note and made payment together with interest.