Exercise 1

On 1 January 2021, a company’s trade receivables amounted to €72,000 and its allowance for doubtful debts amounted to €400. A review of customer files indicated that a customer owing €2,000 has gone bankrupt and the debt is considered to be irrecoverable. An allowance equivalent to 2% of the company’s trade receivables balance is also required. Show how these transactions would be recorded in the company’s accounts records for the year ended 31 December 2021. Subsequently, close off the accounts or balance them off, as necessary.

Exercise 2

On 1 January 2021, a company’s trade receivables amounted to €128,000 and its allowance for doubtful debts amounted to €5,300. A review of customer files indicated that a customer owing €8,000 has gone bankrupt and the debt is considered to be irrecoverable. An allowance equivalent to 3% of the company’s trade receivables balance is also required. Show how these transactions would be recorded in the company’s accounts records for the year ended 31 December 2021. Subsequently, close off the accounts or balance them off, as necessary.

Exercise 3
On 1 January 2021, a company’s trade receivables amounted to €85,000 and its allowance for doubtful debts amounted to €2,100. A review of customer files indicated that a customer owing €5,000 has gone bankrupt and the debt is considered to be irrecoverable. An allowance equivalent to 4% of the company’s trade receivables balance is also required. Show how these transactions would be recorded in the company’s accounts records for the year ended 31 December 2021. Subsequently, close off the accounts or balance them off, as necessary.

Exercise 4

On 1 January 2021, a company’s trade receivables amounted to €319,000 and its allowance for doubtful debts amounted to €4,000. A review of customer files indicated that a customer owing €19,000 has gone bankrupt and the debt is considered to be irrecoverable. An allowance equivalent to 1% of the company’s trade receivables balance is also required. Show how these transactions would be recorded in the company’s accounts records for the year ended 31 December 2021. Subsequently, close off the accounts or balance them off, as necessary.

Answer rating: 100% (QA)

Journal entries Date Account Dr Cr 31Dec21 Irrecoverable debts 2000 Trade Receivables 2000 Irrecoverable debts written off 31Dec21 Profit Loss 1000 Al... View the full answer