Tutorial 7 Trade Receivables

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LTJ 2020

Tutorial 7 – Accounting for Trade Receivables

Section A:

1. Adam’s trade receivables as at 31 December is RM28,000. A bad debt of

RM1,200 has been written off from the trade receivables. He is of the

opinion that about 3% of this outstanding balance will not be able to be

collected and she wants to make an appropriate allowance to reflect the

uncertainty. How much would be shown as the allowance for doubtful debts

in the statement of financial position of the same date?

2. At the end of the year, Coleen has an amount of RM180,600 outstanding

from trade receivables. There is a bad debt of RM1,400 to be written off in

addition to an amount of RM900 which has been written off earlier. She has

never made any allowance for doubtful debts prior to this but her experience

indicates that 2% will be become irrecoverable. What is the amount of

allowance of doubtful debts that should appear in the Statement of Financial

Question 4

The Trial Balance of Safe & Sound as at 30 June revealed the following:

RM

Trade Receivables

502,740

Bad Debts

7,120

Allowance for doubtful debts, 1 July (b/d)

23,220

Before the accounts were closed, the owner decided:

i) To write off an amount of RM4,500 owing by Boris because the

amount could not be recovered from him;

ii) It was decided to reduce the allowance for doubtful debt for the year to

RM22,195.

Required:

Prepare the following as at 30 June:

(a) Trade Receivables Control account

Year Ended

Trade Receivables (gross)

Bad Debts to be written off