Q1 Explain the direct write-off method and the allowance method of recognizing bad debt expense.

Q2. From the given information prepare the Statement of Cash Flows of Abdullah &Company on 31st December2015

Cash flow from activities:

Net Income SR 160375

Cash provided by operating activities:

Depreciation expenses SR 44 200

Issuance of ordinary shares 50 000

Gain on sale of plant assets 4 375

Decrease in accounts payable (4 750)

Sale of plant assets 45 250

Purchase of land (35 000)

Decrease in inventory 7 750

Amortization of intangibles

8 150 Payment of cash dividend

(9 900) Redemption of bonds

(25 000)

Q3. The trial balance before adjustment of XYZ Company reports the following balances:

Dr . Cr.

Accounts receivable $100,000

Allowance for doubtful accounts $ 2,500

Sales (all on credit) 750,000

Sales returns and allowances 40,000

Instructions

Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.

Q4.AG Inc. made a $10,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit.

Prepare the journal entries for following:

1- Record the sale

2- Payment on $6,000 of sales within discount period?

3- Payment on $4,000 of sales received after discount period?