32. C3. Johan Trading has the following balances on 1 January 2016: Account rece

Question

32. C3. Johan Trading has the following balances on 1 January 2016: Account receivables RM14,000 (Debit) Allowance for doubtful debts RM600 (Credit) Given below is the information concerning its account receivables and bad debts for the year ended 31 December 20168: Total sales RM 110,000 Total cash sales RM27,500 Bad debts RM2,500 Payment by debtors RM47,500 Discount allowed RM500 It is the business policy to provide 2% allowance for doubtful debts on the outstanding account receivables at the end of the year What is the ending balance of account receivables in the statement of financial position as at 31 December 2016? Question 6 Not yet answered Marked out of 1.00 P Flag question Select one a. RM47,530 b. RM 139,160 ) C. RM45,570 d. RM45,080

Explanation / Answer

ACCOUNTS RECEIVABLE Balance as on 1 January 2016 14000 Add: Credit sales (110000-27500) 82500 96500 Less: Collections 47500 Write off-Bad debts 2500 Discount allowed 500 Balance as on 31 December 2016 46000 ALLOWANCE FOR DOUBTFUL DEBTS Balance as on 1 January 2016 600 Less: Bad debts written off -2500 -1900 Allowance required = 46000*2% = 920 Bad debts expense for the year = 1900+920 = 2820 ENDING BALANCE OF ACCOUNTS RECEIVABLE AS AT 31ST DECEMBER 2016 Accounts receivable 46000 Less: Allowance for doubtful debts 920 Accounts receivable (Net) 45080

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