An extract of Gidget\'s ledger account reveal the following: 30/6/2013 Allowance

Question

An extract of Gidget's ledger account reveal the following: 30/6/2013 Allowance for doubtful Debts $7,200 30/6/2013 Accounts receivable $610,800 Prepare General journal entries for the following balance day adjustments for the year ended 30 June 2013, including any necessary reversing entries. Bad Debts to be written off $17,600 (including GST) Allowance for doubtful debts to be increased to 8% of accounts receivable, please note the Bad Debt in Part A needs to be used in the calculation for Part B. Interest earned but not yet received of $2,000 Rates prepaid $2,200 Provision for Long Service Leave $41,300 Rent received for the period 1/4/2013 to 31/7/2013 $40,000 (financial year ends 30 June 2013)

Explanation / Answer

Particulars Debit Credit Allowance for doubtful debts              17,600 To   Accounts receivable 17600 Bad Debts ( (610800*8%)-17600)              41,664 To Allowance for doubtful debts 41664 interest Receivable                2,000 To   interest income 2000 Prepaid rates                2,200 To Bank 2200 Long service Leave expense              41,300 To Provision for Long service Leave             41,300 Bank              40,000 To Rent Income 30000 To Rent advance received 10000

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