Shahid Trading Company is applying the balance sheet approach for valuation of its accounts receivables at...

 

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Shahid Trading Company is applying the balance sheet approach for valuation of its accounts receivables at year end. Besides during the year, it has written of Rs. 4,500 accounts receivable from an insolvent customer by debiting it to the allowance for doubtful accounts. At the end of year on 30 June, 2020 the ageing of accounts receivables was computed as under: - 1. 2. 3. 4. 5. 6. Age group Not yet-due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due 181-365 days past due Total Accounts of Accounts Receivables Rs. 350,000 Rs.580,500 Rs. 432,000 Rs. 218,000 Rs. 125,000 Rs. 60,000 Rs. 1,765,500 Based upon the past experience, the company has estimated the percentages of probable uncollectible for the above age groups to be as follow: Group 1 at 0.5%, Group2 at 2%, Group3 at 4%, Group4 at 5%, and Group5 at 8% and Group6 at 10%. Required: A) Based upon the above information, compute the amount of uncollectible accounts. B) Prepare necessary adjusting entry at the yearend of bring the allowance for doubtful accounts to the proper amount. C) Suppose that on 25 July, 2020 a customer namely Usman Brothers owing Rs. 8,400 whose receivable were past due by 150 days died and nothing was collectible from his property. Prepare necessary journal entry required on 25 July, 2020 to adjust this account. Shahid Trading Company is applying the balance sheet approach for valuation of its accounts receivables at year end. Besides during the year, it has written of Rs. 4,500 accounts receivable from an insolvent customer by debiting it to the allowance for doubtful accounts. At the end of year on 30 June, 2020 the ageing of accounts receivables was computed as under: - 1. 2. 3. 4. 5. 6. Age group Not yet-due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due 181-365 days past due Total Accounts of Accounts Receivables Rs. 350,000 Rs.580,500 Rs. 432,000 Rs. 218,000 Rs. 125,000 Rs. 60,000 Rs. 1,765,500 Based upon the past experience, the company has estimated the percentages of probable uncollectible for the above age groups to be as follow: Group 1 at 0.5%, Group2 at 2%, Group3 at 4%, Group4 at 5%, and Group5 at 8% and Group6 at 10%. Required: A) Based upon the above information, compute the amount of uncollectible accounts. B) Prepare necessary adjusting entry at the yearend of bring the allowance for doubtful accounts to the proper amount. C) Suppose that on 25 July, 2020 a customer namely Usman Brothers owing Rs. 8,400 whose receivable were past due by 150 days died and nothing was collectible from his property. Prepare necessary journal entry required on 25 July, 2020 to adjust this account.

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Based upon the data of accounts receivables by age groups and the estimate of perc... View the full answer