Professional Documents
Culture Documents
Self-Study Solutions
Week 8
Ch.7: Q7, Q8, E7.3, PSA7.2, PSA7.4, PSA7.5, PSA7.6, & PSA7.7
7.
8.
ACCT5001 S1 2010
Self-Study Solutions
Week 8
KONA Ltd
Accounts receivables are amounts owed by customers on account. They result from
the sale of goods and services in the normal course of business operations (i.e. in
trade). Notes receivable represent claims that are evidenced by formal instruments of
credit.
Soo Eng should realise that the decrease in the recoverable amount occurs when
estimated uncollectables are recognised in an adjusting entry. The write-off of an
uncollectable account reduces both accounts receivable and the allowance for doubtful
accounts by the same amount. Thus, the recoverable amount does not change.
19,580.00
1,190.40
20,770.40
EXERCISE 7.3
Less: Unpresented cheques
No. Amount
(a)
Less:
Outstanding deposits
Unpresented cheques
708.00
3474
1,050.00
5,100.20
3478
538.20
3481
807.40
3484
832.00
3486
1,389.50
$4,770.20
Dishonoured cheque
$516.00
Bank charges
30.00
(b)
720.10
$4,224.20
3470
(876.00)
(1)
$4,392.20
5,337.20
15,433.20
13,034.30
455.00
$4,224.20
(9.00)
516.00
Cash at Bank
516.00
Bank Charges
Collection of note
3,145.00
(647.10)
30.00
Cash at Bank
(90.00)
15,433.20
30.00
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27/04/2010
ACCT5001 S1 2010
Self-Study Solutions
Week 8
ACCT5001 S1 2010
Self-Study Solutions
Week 8
(b)
Dec. 31
31
Computec Ltd
Cash3,145.00
Bank Fees
....................................................................... 15.00
Notes Receivable ....................................................
Interest Revenue .....................................................
3,000.00
160.00
647.10
Add:
90.00
$7,784.60
Outstanding deposits
$836.15
600.00
1,436.15
9,220.75
9.00
(1,276.25)
$7,944.50
(1)
$5,681.50
3,060.00
8,741.50
($700.00)
(10.00)
(27.00)
(60.00)
27/04/2010
(797.00)
$7,944.50
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ACCT5001 S1 2010
(b)
Self-Study Solutions
Week 8
ACCT5001 S1 2010
Self-Study Solutions
Week 8
Date
Debit
Credit
3,060
Bank Charges
Principles
Establishment of responsibility.
Segregation of duties.
Documentation procedures.
27
60
Physical, mechanical, and electronic A safe is used for the storage of cash and a
controls.
machine is used to issue tickets.
20
Note Receivable
3,000
Interest Revenue
80
700
Cash at Bank
700
31 Sales
10
Cash at Bank
10
27
Cash at Bank
31 Bank Charges
60
Cash at Bank
(b)
27/04/2010
Instead of tearing the tickets, the doorperson could return the tickets to the
cashier who could resell them, and the two could divide the cash.
(2)
The cashier could issue a lower priced ticket than paid for and the doorperson
would admit the customer. The difference between the ticket issued and the
cash received could be divided between the doorperson and cashier.
27/04/2010
ACCT5001 S1 2010
Self-Study Solutions
Week 8
ACCT5001 S1 2010
Self-Study Solutions
Week 8
Mar.
Phuang Ltd
(a)
Dec.
31
(2)
May
25,450
May
(a) & (b)
(c)
Bad Debts
Expense
Dec. 31
Balance
Date
Particular
31/12/2010
Dr
Cr
$25,450
Dr
Cr
2011
31 Allowance for Doubtful Debts ............................500
Accounts Receivable ....................................
500
31 Accounts Receivable.........................................500
Allowance for Doubtful
Debts....................................................
500
31 Cash ................................................................500
Accounts Receivable ....................................
500
2011
Bad Debts Expense .............................................31,100
Allowance for Doubtful Debts ..................................
($30,300 + $800)
31,100
$25,450
Allowance
for Doubtful
Debt
Balance
Date
Particular
31/12/2010
Balance
31/12/2010
31/3/2011
Accounts Receivable
(Bad Debts Write-off)
31/5/2011
Accounts Receivable
(Reverse Bad Debts WriteOff)
Dr
Cr
Dr
Cr
$12,000
$25,450
$500
$36,950
$500
27/04/2010
$37,450
$37,450
27/04/2010
ACCT5001 S1 2010
Self-Study Solutions
Week 8
$58,000.
(b)
(c)
(d)
Under the direct write-off method, accounts receivable are overstated because future
estimated write-offs are not anticipatedwrite-offs are journalised as they occur. In
contrast, under the allowance method, anticipated write-offs are estimated and
reduce the ending accounts receivable balance. The resulting estimated balance of
accounts receivable, stated at recoverable amount, then represents the future
benefits to be recovered from the accounts receivable asset ie, cash.
27/04/2010