CHAPTER 4
EXERCISE
1. Dondang Company applies the direct write-off method in accounting for uncollectible accounts. Prepare journal entries to record the following transactions. Date July 6
Transaction The company determines that it cannot collect RM9,000 of its receivables from customer, Muffin Co.
July 20
Muffin Co unexpectedly pays its account in full. Dondang records its recovery of this bad debt.
2. At the end of financial year, Kabul Supply uses certain percentage of accounts receivables to estimate bad debts. On Dec 31, 2018, it has outstanding account receivables of RM53,000, and it estimates that 4% will be uncollectible. Prepare the adjusting entry to record bad debt expenses for year 2018 under the assumption that the Allowance for Doubtful Debts Account has RM915 credit balance before the adjustment and RM1,332 debit balance before the adjustment. 3. Wayang Company’s year end unadjusted trial balance shows account receivables of RM89,000, Allowance for Doubtful Debt Accounts of RM500 (credit), and sales of RM270,000. Uncollectible are estimated to be 1.5% of account receivables. Prepare year end adjusting entry for uncollectible. 4. Krup Krap Company determines on May 1 that it cannot collect RM1,000 of its account receivables from its customer, Marina. Apply direct write-off method to record this loss as at May 1. 5. A Dec 31, 2018, Esfahan Company reports the following information for its calendar year: Cash sales
RM1,803,750
Credit sales
RM3,534,000
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