At the end of its first year of trading, a company has total trade receivables (debtors) of £20,000.The company accountant decides that there is an element of doubt about the ability of some ofthe trade receivables (debtors) to make payment. The accountant therefore sets up a provision fordoubtful debts in the amount of £3,000. During the company's second year of trading, tradereceivables (debtors) previously regarded as doubtful, in the amount of £500, succeed in makingpayment to the company. At the end of its second year of trading, the company has total tradereceivables (debtors) of £40,000, including the remaining trade receivables (debtors) identifiedas doubtful at the end of the first year. On reviewing trade receivables (debtors) at the end of thesecond year, the company accountant concludes that a total of £4,000 of receivables (debtors)should be classified as doubtful.What is the resultant figure for trade receivables (debtors), after deducting the provision fordoubtful debts, that will appear in the statement of financial position (balance sheet) of thecompany at the end of Year 1?A) 16,500B) 23,000C) 17,000D) 20,000What is the resultant figure for trade receivables (debtors), after deducting the provision fordoubtful debts, that will appear in the statement of financial position (balance sheet) of thecompany at the end of Year 2?A) 47,000B) 44,500C) 36,000D) 40,000

A provision for doubtful debts is an accounting entry made by a company to account for the…

What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 1? A) 16,500 B) 23,000 C) 17,000 D) 20,000 What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 2? A) 47,000 B) 44,500 C) 36,000 D) 40,000

What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 1? A) 16,500 B) 23,000 C) 17,000 D) 20,000 What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 2? A) 47,000 B) 44,500 C) 36,000 D) 40,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a. the Statement of Comprehensive Income for the year ended 31 December2020.
An aging of a company's accounts receivable indicates that $9700 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3010 balance, the adjustment to record bad debts for the period will require a(n)
Ee.19.
Which of the following methods of estimating bad debts expense considers the length of time past due for the outstanding accounts: a. Percentage of sales method b. Percent of accounts receivable method c. Aging of investments method d. Aging of accounts receivable method
Amounts owing by customers amounted to £650,000 at 31 December 2020. The business sets the provision for doubtful debts at 2.5% of trade receivables. The provision for doubtful debts at 31 December 2020 amounted to £19,340.The final adjustment relating to doubtful debts in the accounts for the year ended 31December 2020 will be:a) Dr Doubtful debts charge 16,250 Cr Trade receivables 16,250b) Dr Doubtful debts charge 3,090 Cr Doubtful debts provision 3,090c) Dr Doubtful debts provision 3,090 Cr Doubtful debts charge 3,090d) Dr Doubtful debts charge 16,250 Cr Doubtful debts provision 16,250
2.Which of the following statements is valid? a. Net accounts receivable is not affected by a recovery of an account previously written off. b. A three year, non-interest bearing promissory note is initially recorded in the accounts at its face value. c. When individual customers' accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers' accounts in the statement of financial position. d. When the rate stated on a note is greater than the prevailing market rate of interest for similar obligations, the present value of the note at initial recognition is greater than its face value.
The following information has been extracted from the annual reports of Lilydale Ltd and Monbulk Ltd. Lilydale Ltd Monbulk Ltd $2 950 300 17 100 Sales (net credit) revenue for year Allowance for Doubtful Debts, 1/7/18 Allowance for Doubtful Debts, 30/6/19 Accounts receivable (gross) 1/7/18 Accounts receivable (gross) 30/6/19 $2 204 300 27 100 19780 28 100 722 650 368 000 485 800 384 200 (a) Calculate the receivables turnover ratio and average collection period for both companies. Comment on the difference in their collection experiences. (b) Compare the success or otherwise of their cash collection policies, given that the average receivables turnover for the industry in which the companies operated is 7. Credit terms for both companies are 2/10, n/30.
Accounts Receivable Free Company gathered the following information from its accounting records for the year ended December 31, 2019: • Net Credit Sales for the year - P680,000 • Accounts Receivable at December 31 - 92,000 • Allowance for doubtful accounts at December 31 - 1,850
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How to do? 2
What are the balances of accounts receivable, related allowance account, and bad debts expense on December 31, 2021? A. P7,092,000, P1,110,130, and P756,130 B. P9,616,000, P1,653,370, and P756,130 C. P9,616,000, P1,791,610, and P1,437,610 D. P9,104,000, P1,653,370, and P1,299,370