Task 2:Rustaq company has sold goods on credit RO 55,000 on 31* December 2020 and received RO15,000 towards credit sales. The company had debit balance of RO 5500 and the balance inaccounts receivable accounts RO 40,000.Age of Accounts receivableLess than 5 days5 to 10 days11 to 15 days16 to 20 days21 to 25 days26 to 30 daysAmount5,000Percent1%5%2,0009,0005,00010,0009,000| 40,00015%25%30%50%Totala) Calculate the amount required in the allowance for doubtful debts as on 31* December2021, using accounts receivable method.b) Prepare journal entries for bad and doubtful debtsc) Show the accounting treatment of bad and doubtful debts in income statement and balancesheet.d) Explain how the company can control the aged debts and the process to collect them early.

Name: Task 2:Rustaq company has sold goods on credit RO 55,000 on 31* Decem
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Description: Task 2:Rustaq company has sold goods on credit RO 55,000 on 31* December 2020 and received RO15,000 towards credit sales. The company had debit balance of RO 5500 and the balance inaccounts receivable accounts RO 40,000.Age of Accounts receivableLes

A bad debt expense is reported when a receivable is no longer recoverable due to a customer's…

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Task 2: Rustaq company has sold goods on credit RO 55,000 on 31“ December 2020 and received RO 15,000 towards credit sales. The company had debit balance of RO 5500 and the balance in accounts receivable accounts RO 40,000. Age of Accounts receivable Less than 5 days 5 to 10 days 11 to 15 days 16 to 20 days 21 to 25 days Percent Amount 5,000 1% 5% 2,000 9,000 5,000 10,000 9 000 15% 25% 30% 26 to 30 davs 50%

Task 2: Rustaq company has sold goods on credit RO 55,000 on 31“ December 2020 and received RO 15,000 towards credit sales. The company had debit balance of RO 5500 and the balance in accounts receivable accounts RO 40,000. Age of Accounts receivable Less than 5 days 5 to 10 days 11 to 15 days 16 to 20 days 21 to 25 days Percent Amount 5,000 1% 5% 2,000 9,000 5,000 10,000 9 000 15% 25% 30% 26 to 30 davs 50%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Task 2: Raysoot Company has sold goods on credit RO 550,000 on 31st December 2020 and received RO 100,000 towards credit sales. The company had Allowance for bad debts (debit) balance of RO 55000 and the balance in accounts receivable accounts RO 450,000. Age of Accounts receivable Amount Percent Less than 5 days 225,000 5% 5 to 10 days 220,000 17% 11 to 15 days 40,000 25% 16 to 20 days 75,000 30% 21 to 25 days 50,000 40% Total 40,000 100% 450,000 26 to 30 days a) Calculate the amount required in the allowance for doubtful debts as on 31st December 2021, using accounts receivable method. (3 marks) b) Prepare journal entries for bad and doubtful debts, show the accounting treatment of bad and doubtful debts in income statement and balance sheet. (4 marks) c) Explain how the company can control the aged debts and the measures to collect them early. (4 marks).
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