Homework

The following balances appeared in the ledger of Lo Gloss and Co on 31st May, 2015.

Accounts Receivable                  Dr 354,360

Bad and Doubtful Debts           Dr 16,840

Allowance for Doubtful Debts Cr 12,310

Sales                                            Cr 2,648,420

The transactions for June were:

(i) Sales cash $123570    credit $98000

(ii) Cash collected from customers $114630

(iii) A cheque for $300 (not included in (ii)) was received from a debtor whose debt of $800 had been previously written off.

(iv) Investigation of a credit balance in a debtors account showed that a credit sale of $500 for goods had not been recorded.

(v) Doubtful Debts are normally provided for each month at the rate of 2 per cent of credit sales. After an analysis of accounts receivable balances on 30th June (after the transactions for June had been recorded) below, it was decided to write off all debts more than 12 months overdue and to adjust allowance for doubtful debts to agree with the uncollectable estimate given by the accounts receivable age analysis:

Age of Account          Accounts Receivable                          Uncollectable Estimate

0-1 month                              95000                                                0.8%

1-6 months                           188500                                                4.0%

7-12 months                              48400                                             10.0%

More than 12 months             5650                                               80.0%

Required:

Record the above information in appropriate ledger accounts including balances at beginning. Create extra accounts as necessary (either T or three column)