Jasmine Lee Ltd uses the accounts receivable ageing method to estimate uncollectible amounts. The firm is registered for GST on an invoice basis. As part of the end of year procedure (30 September 2020), the accountant has partially completed an ageing analysis of accounts receivable.

Customer Account	Total	Not yet due	Overdue
……	$340,000	$150,000	$190,000

The following accounts receivable need to be analysed to complete the ageing analysis:

Customer Account	Amount	Due Date
K Hong	$10,000	11 October 2020
Z Zaman	$8,280	19 July 2020
Y Scott	$11,780	8 August 2020
I Chand	$ 7,000	22 October 2020
T Brown	$13,000	16 October 2020
$50,060

According to previous experience, the accountant estimates that a 5% provision on overdue accounts should be made for doubtful debts.

At 1 October 2019, Jasmine Lee Ltd has a debit balance of $380,060 in its Accounts Receivable Control Account and a credit balance of $7,200 in the Allowance for Doubtful Debts Account. During 2020, the business had net credit sales of $856,800 (GST exclusive), payments from credit customers of $813,500 and bad debts actually written off of $33,300.

Required

1. Prepare the general journal entry to adjust the allowance for doubtful debts account on 30 September 2020.
2. Prepare an extract to show how the Accounts Receivable would appear in the Statement of Financial Position at 30 September 2020

Answer rating: 100% (QA)

Adjustment for Allowance for Doubtful Debts Debit Credit All... View the full answer