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• Assume all figures shown are GST inclusive except for the $80,000 balance in the Allowance for doubtful accounts account. (Note that the $115,000 of expected bad debts in part c. is also GST inclusive.)
• Obviously, incorporate GST into parts of the problem, using the GST Clearing account, as needed.
• For part a., round figures to two decimal places. For parts b., c., and d., round figures to the nearest dollar.
• For d., also calculate the average collection period in days and analyse the liquidity of accounts receivable. Assume the collection period in days for the previous year was 100 and that Catu Medical’s credit terms allow customers to pay in three monthly instalments. Also, assume the industry average is 90 days. Use 365 days even though 2020 is a leap year.

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At December 31, 2019, Catu Medical reported the following information on its statement of financial position. Prepare journal entries related to bad debt expense. Accounts receivable RS960,000 Less: Allowance for doubtful accounts 80,000 During 2020, the company had the following transactions related to receivables. 1. Sales on account R$3.700,000 2. Sales returns and allowances 50,000 3. Collections of accounts receivable 2.810,000 4. Write-offs of accounts receivable deemed uncollectible 90,000 5. Recovery of bad debts previously written off as uncollectible 29,000 Instructions a. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. b. Enter the January 1, 2020, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances. Accounts receivable R$1,710,000 ADA R$19,000 c. Prepare the journal entry to record bad debt expense for 2020, assuming that an aging of accounts receivable indicates that expected bad debts are R$115,000. Bad debt expense R$96,000 d. Compute the accounts receivable turnover for 2020 assuming the expected bad debt information provided in (.c.). At December 31, 2019, Catu Medical reported the following information on its statement of financial position. Prepare journal entries related to bad debt expense. Accounts receivable RS960,000 Less: Allowance for doubtful accounts 80,000 During 2020, the company had the following transactions related to receivables. 1. Sales on account R$3.700,000 2. Sales returns and allowances 50,000 3. Collections of accounts receivable 2.810,000 4. Write-offs of accounts receivable deemed uncollectible 90,000 5. Recovery of bad debts previously written off as uncollectible 29,000 Instructions a. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. b. Enter the January 1, 2020, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances. Accounts receivable R$1,710,000 ADA R$19,000 c. Prepare the journal entry to record bad debt expense for 2020, assuming that an aging of accounts receivable indicates that expected bad debts are R$115,000. Bad debt expense R$96,000 d. Compute the accounts receivable turnover for 2020 assuming the expected bad debt information provided in (.c.).

Answer rating: 100% (QA)

A Journal entries of catu medical for the year ended Dec Amount 1 Accounts Receivable Dr 370000000 Sales Revenue Cr 370000000 Being sales recorded for ... View the full answer