QUESTION 1 ACCOUNTS RECEIVABLES (10 marks) • On 1st January 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 1st October 2007, SSS collected $85,000 from outstanding accounts. SSS Ltd’s financial year ends on 31st December. During the year to 31 December 2007, SSS sold goods for cash for $22,000, and on credit for $80,000.
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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. Debit Credit
(ii) Calculate the net accounts receivable after recognising the bad debts expense.
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ACCT1501 Practice Exam Questions & Solutions
2013S1
Part B (i) Assume bad debts expense is determined as an adjusting entry at year end. If uncollectible accounts are estimated to be $3,200 from aging receivables, prepare the adjusting entry on the 31st December to record bad debts expense. Debit Credit
(ii) Calculate the net accounts receivable after the adjusting entry.
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ACCT1501 Practice Exam Questions & Solutions
2013S1
QUESTION 2 Inventory (12 Marks) The following information is taken from the accounting records of Eden Ltd for the year ended 31 December 2010.
Assume Eden uses the first-in-first-out method of allocating cost to inventories. Determine the cost of ending inventory as at 31 December 2010 and the cost of goods sold and gross profit for
