Exercise

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 Transaction

July 6 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

CHAPTER 4

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

Account receivables RM1,070,100 (Debit)

Allowance for Doubtful Debts RM15,750 (Debit)

There was objective evidence that 10% of a RM150,000 debt owed by a debtor, Nathan

Company, would probably be uncollectible. An aging analysis of the rest of account receivables

indicated that an estimated of %% of these accounts is would be uncollectible.

Required:

a. Prepare the adjusting entry for this company to recognize bad debts.

b. Show how Account Receivables and Allowance For Doubtful Debt appear in Statement of

Financial Position as at 31 Dec 2018.

CHAPTER 5

Accounting For Trade Payables, Provisions and Contingent Liabilities/ Assets

Learning Outcome

a. Describe the nature of trade payables, provisions and contingent liabilities/assets under MFRS 132 and MFRS 137/

MFRS 17 (MPERS : Section 21 and 22). b. Explain the recognition and measurement of trade payable under MFRS 139 (MPERS : Section 22) c. Explain the recognition and measurement of provisions, contingent liability and contingent assets under

MFRS 137/MFRS 17 (MPERS : Section 21) d. Describe the presentation of trade payables, provisions, contingent liability and contingent assets in financial statements.