Denning Enterprise is registered for GST. Its general ledger for the financial year ended 30 September 2020 shows the following unadjusted balances:

The business offers all its customers credit terms. Total sales for the year amounted to $3,300,000 plus GST and total sales returns and allowances for the year was $100,000 plus GST.

Required:

a. The business estimated the doubtful debts for the year at 2% of net credit sales.Prepare the general journal to record the adjustment for Allowance for Doubtful Debts at 30 September 2020. Narrations are NOT required. [5 marks]

b. If the Allowance for Doubtful Debts account has a credit closing balance of $225,000 on 30 September 2020, prepare the general journal to record the bad debts written off for the financial year. Narrations are NOT required. [6 marks]

c. If cash collections for the financial year amounted to $3,500,000, prepare Denning Enterprise’s Accounts Receivable Control ledger account (in T-format) to include the above transactions and close the account for the year. [5 marks]

Transcribed Image Text:

Accounts Receivable Control Amt ($) 660,000 Amt ($) Explanation Bal b/d Date Date Explanation 30/9/20 Allowance for Doubtful Debts Amt ($) 200,000 Amt ($) Explanation Bal b/d Date Explanation Date 1/10/19 Accounts Receivable Control Amt ($) 660,000 Amt ($) Explanation Bal b/d Date Date Explanation 30/9/20 Allowance for Doubtful Debts Amt ($) 200,000 Amt ($) Explanation Bal b/d Date Explanation Date 1/10/19

Answer rating: 100% (QA)

a Tota Sale 3300000 Less Sale Return Allowance 100000 Net Credit ... View the full answer