Working and answer
Details Dr Cr
Trade receivable 500000
Allowance for doubtful accounts 25000
balance of its trade receivables written of (0.06×100000) 60000
bad debt expense for 2012 bad debt expense for 2012 30000
Accounts receivables (385000)
Trade receivable 500000 500000
Question 2b
Show how the information related to trade receivables is presented on the company’s statement of financial position as at December 31, 2012.
All trade receivable are assets to the company, they represent the amount of money that the company own in terms of debt. They for m part of the legal obligation of debtor to pay the company the amount owed.
Accounts receivable are contractual obligations that debtors owe the company at the date of the balance sheet. It is imperative to note that, the allowances for any doubtful account must be adequate but not excessive. If the company writes off direct bad debt, the company might loose in the end. Even though the company might find it fit it write of bad debt in the earliest possible, there are chances of the some written off accounts receivable bight paid.
Question 3 a: working and answer
Required:
a. Prepare journal entries relating to these held-for-trading investments for each year. (There are NO brokerage fees.)
Date Narrative Dr Cr
2010
April 13 Alpha 70000
August 24 Beta 45000
December 31 bal c/d 115000
2011
January 8 Delta 35000
May 27 Beta 54000 (19000)
December
31 50400 54000
2012
January 3 Omega 95000
June 30 98000 (3000)
December31 98000 98000
b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year
The company regards its assets and accounts receivable as assets, therefore, if the company fails to disclose all the entities that are effective for annual periods that begin after 31st of the year, the company risks breaching the international accounting standards. The books of accounts of the company are closed at the end of each fiscal year (31st of Dec). The company uses accrual system of accounting and therefore the balance for one year is carried to the following year as balance carried over.
