Ikan Lumba Ltd$$s financial year under consideration was from $01$ October $2005$ to $30$ September $2006.$ The Allowance for Doubtful Debts of Ikan Lumba Ltd on $01$ October $2005$ was $$7,000$ credit balance.

ABC Ltd $($a customer$),$ owing $$2,000$ to Ikan Lumba Ltd$,$ declared bankruptcy on $31$ December $2005.$ There was no chance of Ikan Lumba Ltd recovering anything from ABC Ltd$.$

The accounts executive of Ikan Lumba Ltd aged the Accounts Receivables as at $30$ September $2006,$ shown below:

Number of days overdue Amount $($$$)$

Not yet due

$130$

$3160$

$6190$

Over $90200,000$

$40,000$

$30,000$

$20,000$

$10,000$

From previous experience, Ikan Lumba Ltd analysed that the following percentages of its Accounts Receivables were not collectable.

Age category Percentage $(\%)$

Not yet due

$130$

$3160$

$6190$

Over $902\%$

$5\%$

$10\%$

$15\%$

$20\%$

REQUIRED:

$($a$)$ Write the journal entry for the $31$ December $2005$ transaction.

$($b$)$ Show the full ledger account $($T$-$Account$)$ of the Allowance for Doubtful Debts. $($Show your workings$)$

$($c$)$ In relation to accounting, discuss the following concepts. Give an example each to illustrate your answer.

$($i$)$ Period assumption

$($ii$)$ Accrual concept

$($iii$)$ Going concern concept

Answer rating: 100% (QA)

Answer Ikan Lumba Ltd Accounting Analysis a Journal Entry for December 31 2005 Date Account Debit Cr... View the full answer