Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

problem 1) Part A

Warwick Motors is a garage and carries out car repairs. Many of the customers have outstanding accounts and are normally given 30 days credit. Bill Rogers, the owner of the business, wishes to recognise the risk involved as bad debts are unfortunately a common occurrence. On 31 May 2006, the end-of-year for Warwick Motors, the total amount of money owed by credit customers was Rs 125,000.

At the end of the trading year, Bill decided to introduce provision for doubtful debts. His approach was to make a general provision equal to 3 per cent of total debtors.

Required:-

(a) Suggest a reason why Bill Rogers would make the general provision for doubtful debts rather than specific provision.

(b) Compute the provision for doubtful debts for Warwick Motors.

(c) Demonstrate the book keeping entries required to provide for doubtful debts.

(d) What effect will the doubtful debt provision have on profit for Warwick Motors?

Part B

On examining the books of Exports Co., you ascertain that on 1 October 2005 the receivables ledger balances were Rs 8,024 debit and Rs 57 credit, and the payables ledger balances on the same date stood at Rs 6,235 credit and Rs 105 debit.
For the year ended 30 September 2006 the following particulars are available:

                                                                                                      Rs
Sales                                                                                            63,728
Purchases                                                                                     39,974
Cash from trade accounts receivable                                               55,212
Cash to trade accounts payable                                                       37,307
Discount received                                                                            1,475
Discount allowed                                                                              2,328
Returns inwards                                                                               1,002
Return outwards                                                                                535
Bad debts written off 326
Cash received in respect of debit balances in payables ledger                 105

Following information is also available:

• Amount due from customer as shown by receivables ledger, offset against amount due to the same firm as shown by payables ledger (settlement by contra) Rs 434

• Allowances to customers on goods damaged in transit Rs 212

• All sales and purchases were affected on credit.

On 30 September 2006 there were no credit balances in the receivables ledger except those outstanding on 1 October 2005, and no debit balances in the payables ledger.

Required:

(i) prepare up the following accounts to record above transactions and bring down the balances as at 30 September 2006:

(a) Receivables control account.

(b) Payables control account.

(ii) Briefly describe reasons for preparing control accounts.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M96382

Have any Question? 


Related Questions in Accounting Basics

Your dog peyton has severe allergies and cannot have the

Your dog, Peyton, has severe allergies and cannot have the usual store-bought dog treats. You have been making homemade treats for him that are all-natural and hypoallergenic. Over the past year, you have been making and ...

Managerial accounting assignment task- group report

Managerial Accounting Assignment Task- Group Report: "Measuring Performance and Management Control Systems" - A study of Performance Measurement in Australian Public Companies. Outcomes- a) Analyse the roles of cost and ...

Assignmentcarlton speciality plc is a small family owned

Assignment: Carlton Speciality PLC is a small family owned firm that manufactures custom made furniture and uses job costing system. The company does not have computerised system and thus maintains all accounting records ...

Management accounting with a strategic perspective

Management Accounting with a Strategic Perspective Assignment- Scenario - You are a management accountant at Mirror Tools Limited (Mirror Tools) and report to Marshall Singh, who is the chief financial officer. Mirror To ...

Explain the purpose of the cost of sales adjustment in the

Explain the purpose of the cost of sales adjustment in the profit and loss account. Include a worked example in your explanation.

Fill in the amounts for x y and z in the following table

Fill in the amounts for X, Y, and Z in the following table. (The company started business on January 1, 2009 31-Dec-09 31-Dec-10 Assets $4,750 $5,350 Liabilites 2150 $1,400 Cantributed Capital $1,200 $1,200 Retained earn ...

Dq1explain how the account of biblical creation can be

DQ1 Explain how the account of biblical creation can be viewed as a model for innovative and creative leaders when managing chaos. DQ2 Hypothesize why it is important for leaders both to create and enable chaos as well a ...

International accountingbased upon your three papers

International Accounting Based upon your three papers (Attached), the accounting standards paper and the company analysis paper, prepare a PowerPoint presentation of 10-15 slides in which you summarize what you have lear ...

Tim and jill taylor are retiring this year tim has worked

Tim and Jill Taylor are retiring this year! Tim has worked for a utility company since his co-op job in college and has participated in all of the company's retirement savings plans. Jill has worked since their kids were ...

Why do organizations have internal audits compliance audits

Why do organizations have internal audits, compliance audits, or operational audits performed? Provide examples of what type of organization might have each of these audits and for what purpose? Who would want this infor ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate