Compute the estimated uncollectable accounts receivable

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Reference no: EM131923219

QUESTION - Pacific Brand Ltd sells portable barbeques on credit. At 31 December (the financial year end), the general ledger of Provision for Bad Debts account showed a $50 debit balance before adjustment. The subsidiary ledger of the accounts receivable before any adjustment indicated the following:

Name of customers

Invoice date

Amount

Alibaba top

1-Feb

$1,450

Hygiene corp

12-Mar

860

Isacc Bloom

10-Sep

640

 

31-Dec

1,420

Jacob Bro

15-Jul

2,215

Kaul Store

16-Oct

560

Lawson Grocery

16-Jan

1,190

 

7-Apr

1,425

 

8-Nov

250

Others

5-Dec

12,680

 

 

$22,690

Pacific Brand maintains 30 days credit terms concerning the sale of the goods on credit. In addition, the policy for its uncollectable accounts receivable is based on the following percentage:

 

Estimated % uncollectable

Accounts not due

4

Accounts past due

 

1-30 days

10

31-60 days

30

61-90 days

50

Over 90 days

70

Required (ignore GST and narration and show all workings):

(a) Prepare an ageing schedule of accounts receivable at the end of December.

(b) Compute the estimated uncollectable Accounts receivable.

 (c) Prepare the journal entry in general journal form to record the provision of the uncollectable accounts receivable.

Reference no: EM131923219

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