Bell is a sole trader making up his accounts to 31 July each year. At 31 July
Question:
Bell is a sole trader making up his accounts to 31 July each year.
At 31 July Year 6 the balance on the allowance for doubtful debts account was $1,420,000. During the following financial period ending 31 July Year 7, Bell suffered a number of bad debts amounting to $723,000, which he wrote off to the bad debts account.
At 31 July Year 7 Bell listed out all his receivables balances, which totaled $32,456,000. After reviewing the list Bell decided that three balances - namely Lee $230,000, Bee $562,000 and Yee $56,000 - were all doubtful and had to be allowed for as doubtful debts. In addition, he considered that 2% of all the remaining balances were doubtful and had to be provided for.
Required
Show the ledger accounts reflecting the necessary adjustments, and the relevant extracts from the financial statements.
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett