Bad debts

Account Receivables
written off year Allowance of Doubtful Debt
Year before bad debts
to 31 December (RM)
written off (RM)
(RM)
2012 2,100 30,000 5%
2013 750 38,100 5%
2014 200 4,750 5%

You are required to show:

a)      The Bad Debts account for 3 years
b)      The Allowance for Doubtful Debts for 3 years
c)      The Income Statement (Extract) for 3 years
d)      The Financial Position (Extract) for 3 years

Allowance:
30,000-2100: 27,900*5%: 1395

38,100-750: 37,350*5%: 1867.5

4750-200: 4550* 5%: 227.5

Income St

Gross Profit
Add: Others Income
Reducing In Allowance
Less: Expenses
Bad debt
Allowance for Doubtful Deb

Financial Pos
Current Asset
Acc Receivable
Less: Aalowance
Net Acc. Receivable
 Dt Bad Debt Ct
12/31/2012 Acc Receivable 2100 31-Dec Inc. Stat 2100

2100 2100
12/31/2013 Acc Receivable 750 31-Dec Inc Stat 750

750 750
12/31/2014 Acc Receivable 200 31-Dec Inc Stat 200

200 200

Dt Allowance For Doubtful Debt Ct

12/31/2012 Bal c/d 1395 12/31/2012 Inc Stat 1395

1395 1395
12/31/2013 Bal c/d 1867.5 1/1/2013 Bal b/d 1395
31-Dec Inc Stat 472.5

1867.5 1867.5
31-Dec Inc Stat 1640 Jan-01 Bal b/d 1867.5
31-Dec Bal c/d 227.5

1867.5 1867.5
1-Jan Bal b/d 227.5

Income Statement extract for 3 years

2012 2013 2014
Gross Profit xx xx xx
Add: Others Income
Reducing In Allowance 1,640
Less: Expenses
2100 750 200
Allowance for Doubtful Debt 1395 472.5

Financial Position extract as at 3 years

 2012 2013 2014
Current Asset
Acc Receivable 27,900 37,350 4550
Less: Aalowance -1,395 -1,867.5 -227.5
Net Acc. Receivable 26,505 35,482.50 4322.5
2. On Balance Day, 31 December 2002, Nathan’s Trial Balance shows the following:
Debtors: RM10,000
Bad Debts: RM200
Allowance for Doubtful Debt: 150

On further checking, Nathan discovers that:

a. A bad debt of RM300 has not yet been recorded in the books
b. He needs to maintain his Allowance for Doubtful Debts at 2% of balance debtors, as is his policy.
You are required to show:
        i.            Bad Debts account
      ii.           Allowance Doubtful Debts account
    iii.            Extract of Income Statement
    iv.            Extract of Balance Sheet.

Dt Bad Debt Ct
31-Dec-02 Acc. Receivable 200 31-Dec Inc Stat 500
31-Dec Acc Receivable 300

500 500

Income Statement (extract) for year 2002

Gross Profit xx
Add: Other Income

Less Expenses
Bad Debt 500
Allowance for doubtful debt 44

Financial Position as at 31/12/2002

RM
Current Asset
Account Receivable 9700
Less: Allowance -194
Net Account Receivable 9506
 Allowance 2002: 10,000-300: 9700*2%: 194

Dt Allowance for Doubtful Debt Ct

31-Dec Bal c/d 194 1-Jan Bal b/d 150
Inc Stat 44

194 194
1-Jan Bal b/d 194
3. The following balances was taken from Xu’s Trial Balance.

Debtors: RM4,500
Bad Debts: RM200
Allowance for Doubtful Debt: 120

It was decided to write-off another RM100 as bad debts and 5% as the allowance for bad debts.
You are required:

        i.            Bad Debts account

      ii.            Doubtful Debts account
    iii.            Extract of Income Statement
    iv.            Extract of Balance Sheet.

Dt Bad Debt Ct

Income Statement for 3 years

Financial Position as at 3 years

Dt Allowance For Doubtful Debt Ct
Dt Bad Debt Ct
12/31/2010 Debtors 1240 31-Dec Inc Stat 1240

1240 1240
12/31/2011 Debtors 2608 31-Dec Inc Stat 2608

2608 2608
12/31/2012 Debtors 5424 31-Dec Inc Stat 5424

5424 5424

c)
Income statement extract for 3 years
2010 2011 2012
Gross Profit xx xx xx
Add: Others Income
Reducing in Allowance 160
Less: Expenses
Bad debt 1240 2608 5424
Allowance for Doubtful Debt 1640 2920

d)
Financial Position (extract) for 3 years
2010 2011 2012
Current Asset
Debtors 41,000 76,000 88,000
Less: Allowance -1,640 -4,560 -4,400
Net Debtors 39,360 71,440 83,600
Workings:
2010: 41,000*4%: 1640
2011: 76,000*6%: 4560
2012: 88,000*5%: 4400

Topup/ take out profit: inc stat credit

Declare income: Inc stat debit

Contra-asset

Dt Allowance for doubtful debt Ct

31-Dec Bal c/d 1640 12/31/2010 Inc Stat 1640

1640 1640
31-Dec Bal c/d 4560 1/1/2011 Bal b/d 1640
31-Dec Inc Stat 2920

4560 4560
31-Dec Inc Stat 160 1/1/2012 Bal b/d 4560
31-Dec Bal c/d 4400

4560 4560
1/1/2013 Bal b/d 4400
4. The following is the Ash’s trial balance as at 31 March 2011
Debit Credit
Bank Overdraft 7,600
Capital 20,500
Drawings 10,000 Remarks:
Electricity 2,000
Furniture 9,000
Insurance 1,500
Other Expenses 65,800
Allowance for Doubtful Debt 1,200
Purchases 80,000
Sales 150,000
Opening stocks 10,000
Creditors 20,000
Debtors 21,000
199,300 199,300

Additional Information:

a.       Stock at 31 March 2011 is RM15,000

b.      At 31 March 2011, Ash owes the electricity board RM600, and RM100 had been paid in advance for Insu
c.       An Allowance for Doubtful Debt is to be set 10% of trade debtors as at the end of the year.
Required: Prepare Ash’s Income statement and Balance Sheet as at that date.
 Income Statement for the year ending 31st March 2011
RM RM RM

aid in advance for Insurance.

Financial Position as at 31st March 2011
RM RM
5. The following is the Lime’s trial balance as at 30 September 2012

Debit Credit
Bank Overdraft 16,200
Capital 19,300
Drawings 16,000
Insurance 1,800
Bank Loan (Long Term) 72,000
Loan Interest 7,500
Other Expenses 57,700
Office Equipment 44,000
Allowance for Doubtful Debt 2,000
Purchases 300,000
Sales 372,000
Rent 10,000
Opening Stock 36,000
Debtor 93,000
Creditor 105,000
Cash 20,000
Bad Debts Expenses 500
586,500 586,500

Additional Information:
a.       Stock at 30 September 2012 is RM68,000
b.      At 30 September 2012, accrued for rent of RM2,000 and prepaid insurance of RM200
c.       The Allowance of Doubtful Debt is to made equal to 10% of Debtor.
Required: Prepare Lime’s Income statement and Balance Sheet as at that date.
September 2012
Income Statement for the year ending 31st Dec 2012
RM
Sales

Less: Cost of Goods Sold

Remarks:

Add: Others Income

Less: Expenses

rent of RM2,000 and prepaid insurance of RM200

to made equal to 10% of Debtor.
ance Sheet as at that date.
 Financial Position as at 31st Dec 2012
RM RM RM RM
Fixed Asset

Current Asset

Current Liability

Long term Liability

Owners' Equity

0
6. The following is the Lime’s trial balance as at 30 September 2012

Debit Credit
Bank Overdraft 16,200
Capital 19,300
Drawings 16,000
Insurance 1,800 Remarks:
Bank Loan (Long Term) 72,000
Loan Interest 7,500
Other Expenses 57,700
Office Equipment 44,000
Allowance for Doubtful Debt 2,000
Purchases 300,000
Sales 372,000
Rent 10,000
Opening Stock 36,000
Debtor 93,000
Creditor 105,000
Cash 20,000
Bad Debts Expenses 500
586,500 586,500

Additional Information:
a.       Stock at 30 September 2012 is RM68,000
b.      At 30 September 2012, accrued for rent of RM2,000 and prepaid insurance of RM200
c.       The Allowance of Doubtful Debt is to made equal to 1% of Debtor.
Required: Prepare Lime’s Income statement and Balance Sheet as at that date.
 Income Statement for the year ending 31st Dec 2012
RM RM
Sales

Less: Cost of Goods Sold

Add: Others Income

Less: Expenses

nd prepaid insurance of RM200

1% of Debtor.
 Financial Position as at 31st Dec 2012
RM RM RM
Fixed Asset

Current Asset

Current Liability

Long term Liability

Owners' Equity

0
Technology House Sdn Bhd sells multimedia related products on credit to its customer and has
extracted the following information for the last two years. Its financial year ends on 31 December.

Account Receivable’s balance at 31/12/2013 was RM15,000.

Account Receivable’s balance at 31/12/2014 was RM23,000.

Bad debts had been written off at year end were as follows:

2013 1 June Ms Tan RM1,900

24 August Mr. Zaki RM 400

2014 7 March Mr Raymond RM 1,540

31 October Mr Mani RM 1,380

The Allowance for Doubtful Debts had been estimated at year end 2013 and 2014 were 2% and 3%
respectively. On 1 January 2013, the allowance for doubtful debts account had a credit balance of RM900.

Required:
a.       Prepare the bad debts account for the year ended 31st December 2013 and 2014.
b.      Prepare the Allowance (Provision) for Doubtful Debt account for the ended 31st December 2013 and 2014 clearly showin
c.       Prepare the extracted of income statement for the year ending 31st December 2013 and 2014.
d.      Prepare the extracted of financial position as at 31st December 2013 and 2014.

Dt Bad Debt Ct
2013
1-Jun Acc Receivable- tan 1,900 31-Dec Inc Stat 2300
24-Aug Acc Receivable-zaki 400
2300 2300

2014
7-Mar Acc Receivable- Raymond 1540 31-Dec Inc Stat 2920
31-Oct Acc Receivable- Mani 1380
2920 2920

Income Statement for 2 years

2013 2014
Gross profit xxx xxx
Add: Others Income
Reducig in Allowance 600
Less: Expenses
Bad Debt 2300 2920
Allowance for Doubtful debt 390

Financial Position as at 2 years

2013 2014
Current Assets
Account Receivables 15,000 23,000
Less: Allowance (300) (690)
Net Acc Receivables 14,700 22,310
 Allowance:
2013 : 15,000*2% : 300

2014: 23,000*3%: 690

013 and 2014 clearly showing the balance brought forward each year.

Dt Allowance For Doubtful Debt Ct

2013
31-Dec Inc Stat 600 1-Jan Bal b/d 900
31-Dec Bal c/d 300
900 900

2014
31-Dec Bal c/d 690 1-Jan Bal b/d 300
31-Dec Inc Stat 390
690 690
2015
1-Jan Bal b/d 690