On 1 June, Mason and Boyce had Accounts Receivable and Allowance for Doubtful Debts accounts as below. Ignore GST.
Account Receivables:
1/6 Balance 849,55
Allowance for Doubtful Debts: 1/6 Balance 12,100
During June, the following transactions occurred:
1. Revenue earned on credit, $1,195,000.
2. Sales returns, $24,100
3. Accounts receivable collected, $1,400,000.
4. Accounts written off as uncollectable, $15,851.
Based on an ageing of accounts receivable on 30 June, the firm determined that the Allowance for Doubtful Debts account should have a credit balance of $13,500 on the balance sheet as at 30 June. Ignore GST.
Required:
a) Prepare general journal entries to record the four transactions and to adjust the Allowance for Doubtful Debts account.
(b) Show how accounts receivable and the allowance for doubtful debts would appear on the balance sheet at 30 June.
c) On 29 June, Kim Ltd, whose $2,400 account had been written off as uncollectable in June, paid its account in full. Prepare journal entries to record the collection.