ACC 101

Q. No. 01 Debtors Account

Following information is related to the ABC & C0, for the year ended December 31, 2021.

Account Receivable 500,000

Allowance for Bad debts (Dr) 15,000
Sales 750,000
Sales Returns & allowances 25,500
Cash collected from Customers 875,000
Bad debts estimated 3% on Balance sheet method

Compute & record the estimated bad debts for the year ended December 31, 2021

Q. No. 02 Depreciation

On January 01, 2020. ABC & Co. purchased a machine at a cost of Rs. 61,875. The machine had
an estimated useful life of 15 years, 20,000 machine hours and 300,000 units. Its estimated
residual value is Rs. 1,875. The machine operated 7,000 hours and produced 27,000 units in
2020 and 4,000 hours and 21,600 units in 2021.

Calculate depreciation for year 2020 & 2021 on the basis of following Depreciation methods:

a. Straight Line Method

b. Units method
c. Diminishing method @ 15%
d. Machine hours method
Q. No. 03

Paid $22,500 for a Machine which cost $30,000 with the garage accepting $17,500 in part
exchange. The old Machine cost $32,000 and had depreciated by $10,000. Compute & record the
Journal entries?

Q. No. 04

What are the advantages of Accounts Receivable Aging Report?

The accountant of ABC & Co provided the following:

a. Account Receivable opening balance Rs. 10,000.
b. Allowance for Bad Debts opening balance Rs. 1,000
c. Cash sales Rs. 72,000
d. Credit Sales Rs. 78,000
e. Collection from customer Rs. 40,000
f. Sale Return & allowance Rs. 700
g. Customer account written off Rs. 1,500
h. Previously written off account recovered R. 700

Required:

Record bad debt expense estimating Allowance for Bad Debts @5% on ending balance of
Account Receivable

Record bad debt expense estimating Allowance for Bad Debts @2% on Credit sales