FINAL ADJUSTMENTS: BAD & DOUBTFUL DEBTS

Ugne Pa
Note by , created over 5 years ago

Undergraduate IFA Note on FINAL ADJUSTMENTS: BAD & DOUBTFUL DEBTS, created by Ugne Pa on 03/26/2014.

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Ugne Pa
Created by Ugne Pa over 5 years ago
Accruals + Prepayments = final adjustments
Ugne Pa
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ONLY CAUSES OF INCREASES & DECREASES IN NET ASSETS & CAPITAL
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MEMORISE
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PERCY’S TRIAL BALANCE AT 30.9.2011 INCLUDED:  • TRADE RECEIVABLES £62,000   • DOUBTFUL DEBT PROVISION £6,000  • TRADE RECEIVABLES INCLUDE £12,000 DEBTS WHICH HAVE NOW BECOME IRRECOVERABLE  • ONE OF THESE DEBTS AMOUNTING TO £2,000 HAD BEEN PROVIDED FOR LAST YEAR   • JAMES ESTIMATES THE DOUBTFUL DEBT PROVISION AT 30.9.11 AT £8,000     REQUIRED:   • LIST THE FINAL ADJUSTMENTS IN JOURNAL FORM   • CALCULATE THE BALANCE OF TRADE RECEIVABLES AT THE YEAR END   • SHOW HOW THESE ITEMS WOULD APPEAR IN THE 2011 INCOME STATEMENT & BALANCE SHEET 

TRADE RECEIVABLES  PER TRIAL BALANCE            62  WRITTEN-OFF                     (12)                                                50

DISCLOSURE  INCOME STATEMENT   EXPENSES:   BAD & DOUBTFUL DEBTS [10 + 4]       14    BALANCE SHEET   CURRENT ASSETS:   TRADE RECEIVABLES                           50   DOUBTFUL DEBT PROVISION               (8)                                                                      42

FINAL ADJUSTMENTS                                                                                           DR           CR TRADE RECEIVABLES                                                                                                              12  BAD & DOUBTFUL DEBTS           10  DOUBTFUL DEBT PROVISION      2  Writing off irrecoverable bad debts. Doubtful debts provision now stands £4K [6-2]. It needs to be increased to £8K:  BAD & DOUBTFUL DEBTS             4  DOUBTFUL DEBT PROVISION                      4

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