Question 2 (25 marks)
All transactions below relate to PJ Construction Ltd’s uncollectable accounts for the financial year ended 30 June 2020. Note: The amounts shown are GST inclusive.
July 18 Wrote off the $629.20 account of F. Fox as uncollectable.
Oct. 19 Re-established the account of K. Meak and recorded the collection of $1815 in full payment of his account, which had been written off previously.
Jan. 31 Received 40% of the $968 balance owed by B. Black and wrote off the remainder as uncollectable.
Feb. 16 Wrote off as bad the accounts of Denis Co. Ltd, $2783, and H. Howard, $3872.
March 20 Received 25% of the $1742.40 owed by GJ Carpenters and wrote off the remainder as a bad debt.
April 16 Received $1173.70 from G. Dolby in full payment of his account, which had been written off earlier as uncollectable.
June 30 Estimated bad debts expense for the year to be 1.5% of net credit sales of $694 100.
The Accounts Receivable account had a balance at 30 June 2020 of $208 120, and the beginning (1 July 2019) balance in the Allowance for Doubtful Debts account was $9 300.
Required:
(a) Prepare journal entries for each of the transactions. (13 Marks)
(b) Determine:
i. the balance in the Allowance for Doubtful Debts account after the 30 June adjustment
(3 Marks)
ii. the expected realisable value of the accounts receivable as at 30 June. (3 Marks)
(c) Assume that instead of basing the allowance for doubtful debts on net credit sales, the estimate of uncollectable accounts is based on an ageing of accounts receivable and that $11 630 of the accounts receivable as at 30 June was estimated to be uncollectable.

Determine:
i. the general journal entry to bring the allowance account to the desired balance. (3 Marks)
ii. the expected realisable value of the accounts receivable as at 30 June. (3 Marks)

DETAILED ASSIGNMENT

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