Thinkswap DocumentACCT1501 Practice Exam Questions & Solutions 2013S1 1 QUESTION 1 ACCOUNTS RECEIVABLES (10 marks) •On 1stJanuary 2007, SSS Ltd. has a debit balance of $30,000 in Accounts Receivable and a credit balance of $ 4,500 in the Allowance for Doubtful Debts. •On 1st July, 2007, one of SSS’s customers, BBB, went bankrupt. BBB owes SSS $2,500 and there is no hope for recovering this amount. •On 1stOctober 2007, SSS collected $85,000 from outstanding accounts. SSS Ltd’s financial year ends on 31stDecember. •During the year to 31 December 2007, SSS sold goods for cash for $22,000, and on credit for $80,000. Required: Part A (i)If bad debts expense for 2007 is recognised based on 2% of credit sales, prepare the entry to record bad debts expense.
3 marks: 1 mark for each account name, 1 mark for amount
(ii) Calculate the net accounts receivable after recognising the bad debts expense.