You are preparing the year end accounts as at 30 April 2020 for a client who buys and sells medical products. You are dealing with bad debts and provision of doubtful debts. Included in the debtors balance is an amount of RM3,574 which has been outstanding for just over a year. Your client has decided to write this balance off. Provision for doubtful debts is to be made as follows: 6% of balances which have been outstanding for between 30 and 59 days; 50% of balances which have been outstanding for 60 days or more At the end of the previous year the provision for doubtful debts was RM4,516. The debtors’ balances, including the irrecoverable balance of RM3,574, have been analysed as follows: Age of debt Balance RM Less than 30 days 36,591 30 days to 59 days 18,700 60 days and over 9,722 Total debtors 65,013 Required: a) Calculate the total charge to the profit and loss account for the year in respect of bad and doubtful debts and prepare the value to be reported in the balance sheet for debtors. b) Prepare extract of the Statement of Profit or Loss for year ended 30 April 2020 and Statement of Financial Position as at 30 April 2020.
QUESTION 1
You are preparing the year end accounts as at 30 April 2020 for a client who buys and sells
medical products. You are dealing with
Included in the debtors balance is an amount of RM3,574 which has been outstanding for just
over a year. Your client has decided to write this balance off.
Provision for doubtful debts is to be made as follows:
6% of balances which have been outstanding for between 30 and 59 days;
50% of balances which have been outstanding for 60 days or more
At the end of the previous year the provision for doubtful debts was RM4,516.
The debtors’ balances, including the irrecoverable balance of RM3,574, have been analysed as
follows:
Age of debt Balance
RM
Less than 30 days 36,591
30 days to 59 days 18,700
60 days and over 9,722
Total debtors 65,013
Required:
a) Calculate the total charge to the
doubtful debts and prepare the value to be reported in the balance sheet for debtors.
b) Prepare extract of the Statement of Profit or Loss for year ended 30 April 2020 and
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