Jackson Computers sells computing equipment on credit. It uses the ageing of accounts receivable method...
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Accounting
Jackson Computers sells computing equipment on credit. It uses the ageing of accounts receivable method for estimating bad debts. On 30 June 2020, the Allowance for Doubtful Debts account had a balance of $4,400 CR before any adjustments. An ageing analysis of the account receivable balance as at 30 June 2020 is provided below. The uncollectable percentages for each age group are based on past experience and are shown next to the respective aged balances. Jackson Computers is registered for goods and services tax (GST).
Balance
% estimated uncollectable
Accounts not yet due
Accounts overdue: 130 days
3160 days
6190 days
91 days and over
$148,000
32,000
26,000
35,000
24,000
0.5
2.5
11
24
42
$265,000
REQUIRED:
Using the ageing of accounts receivable method, calculate the estimated bad debts expense from the above information. Show all workings. (Hint: The business is registered for GST)
Prepare the general journal entry to record bad / doubtful debts expense.
(Narration is not required).
Show how the accounts receivable will appear on the Statement of Financial Position as at 30 June 2020.
Answer & Explanation
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