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SUGGESTED SOLUTION
THEORY QUESTIONS
1. Allowance for doubtful debts (AFDD) is an annual estimation made by a business for the
uncollectible debts.
2. Debtors’ death, bankruptcy charges, financial problems or the debtors were not
traceable.
3. Different between bad debts and bad debts recovered:
Bad debts Bad debts recovered
Bad debts would be written off Bad debts are recovered when the
when the accounts receivable could business receives payment for
not be settled by the customers or accounts receivable which has been
debtors even after several written off as bad debt earlier.
reminders.
1. C
2. C
3. B
4. A
5. C
1
COMPREHENSIVE QUESTIONS
3.
a. Allowance for doubtful debts = 4% x (RM55,000 – 450) = RM2,182
b. Journal entry
Dr Bad debts RM2,182
Cr Allowance for doubtful debts RM2,182
4.
Allowance for doubtful debts = 3% x (RM90,000 – 500) = RM2,685
a.
Allowance for doubtful debts
RM RM
Accounts receivable 500 Bal. b/d 900
Balance c/d 2,68 Profit or Loss (Increase in 2,285
5 AFDD) 3,185
3,18
5
b.
Hainan Enterprise
Statement of Profit or Loss for the year ended 31 December 2018 (extract)
RM
Expenses
2
Increase in Allowance for Doubtful Debt 2,285
Hainan Enterprise
Statement of Financial Position as at 31 December 2018 (extract)
RM
Current Assets
Accounts receivable (RM90,000 – RM500) 89,500
Less: Allowance for doubtful debts (2,685)
86,815
5.
Allowance for doubtful debts = 3% x (RM71,500 – 1,200) = RM2,109
a.
Allowance for doubtful debts
RM RM
Accounts receivable 1,200 Bal. b/d 3,500
Profit or Loss (Decrease in AFDD) 191
Balance c/d 2,109
3,500 3,500
b.
Bonda Enterprise
Statement of Profit or Loss for the year ended 31 December 2018 (extract)
RM
Revenues
Decrease in Allowance for Doubtful Debt 191
Bonda Enterprise
Statement of Financial Position as at 31 December 2018 (extract)
RM
Current Assets
Accounts receivable (RM71,500 – RM1,200) 70,300
Less: Allowance for doubtful debts (2,109)
68,191
3
6.
C e m a ra T ra d in g
S ta te m e n t o f P ro fi t o r L o s s fo r th e y e a r e n d e d 3 1 D e c e m b e r 2 0 1 8
RM RM RM
S a le s 1 7 2 ,6 5 0
L e s s : R e tu rn in w a rd s (7 ,6 5 0 )
L e s s : D is c o u n t a llo w e d (5 9 0 )
N e t S a le s 1 6 4 ,4 1 0
L e s s : C o s t o f G o o d s S o ld
O p e n in g in v e n to ry 2 2 ,6 5 0
P u rc h a s e s (1 0 4 ,5 0 0 -1 ,0 0 0 ) 1 0 3 ,5 0 0
L e s s :R e tu rn o u tw a rd s (6 ,6 5 0 )
L e s s : D is c o u n t re c e iv e d (5 8 0 )
N e t P u rc h a s e s 9 6 ,2 7 0
C o s t o f G o o d s A v a ila b le fo r S a le 1 1 8 ,9 2 0
L e s s : C lo s in g in v e n to ry (2 4 ,1 5 0 )
C o s t o f G o o d s S o ld (9 4 ,7 7 0 )
G ro s s P ro fi t 6 9 ,6 4 0
Add: R e ve nue s
R e n ta l in c o m e 1 0 ,3 0 0
Les s: Expenses
S a la rie s 1 1 ,4 0 0
U ti liti e s ( 5 6 2 0 + 3 5 0 0 ) 9 ,1 2 0
T e le p h o n e e x p e n s e s ( 1 0 0 0 + 2 1 0 0 ) 3 ,1 0 0
In s u ra n c e 9 ,9 0 0
D e p re c ia ti o n - F ix tu re s & fi tti n g s 2 ,1 6 5
D e p re c ia ti o n - O ffi c e e q u ip m e n t 1 ,0 5 0
In c re a s e in A F D D 85 (3 6 ,8 2 0 )
N e t P ro fi t 4 3 ,1 2 0
4
C e m a ra T ra d in g
S ta te m e n t o f F in a n c ia l P o s iti o n a s a t 3 1 D e c e m b e r 2 0 1 8
RM RM RM
N o n -c u rre n t A s s e ts
Land 5 5 ,1 5 0
F ix tu re s & fi tti n g s 2 1 ,6 5 0 (1 0 ,3 1 5 ) 1 1 ,3 3 5
O ffi c e e q u ip m e n t 1 2 ,0 0 0 (6 ,0 5 0 ) 5 ,9 5 0
F ix e d d e p o s it 2 3 ,1 0 0
9 5 ,5 3 5
C u rre n t A s s e ts :
In v e n to ry 2 4 ,1 5 0
A c c o u n ts re c e iv a b le (2 5 0 0 0 - 5 0 0 ) 2 4 ,5 0 0
Le s s : A FD D (7 3 5 ) 2 3 ,7 6 5
B ank 9 ,3 4 0
Cash 5 ,6 5 0 6 2 ,9 0 5
1 5 8 ,4 4 0
F in a n c e d b y :
O w n e r's E q u ity
C a p ita l 7 5 ,6 2 0
L e s s : D ra w in g s (5 5 0 0 + 1 0 0 0 ) ( 6 ,5 0 0 )
A d d : N e t P ro fi t 4 3 ,1 2 0
1 1 2 ,2 4 0
N o n -c u rre n t L ia b iliti e s
Loa n 3 0 ,0 0 0
C u rre n t L ia b iliti e s :
A c c o u n ts p a y a b le 1 0 ,6 0 0
A c c ru e d u ti liti e s 3 ,5 0 0
A c c ru e d te le p h o n e x p e n s e s 2 ,1 0 0
1 5 8 ,4 4 0