AccforMgrsUnit5….ppt

Completed Operating Activities * Depreciation for parts of the year Exercises Complete Exercise 5.13 * Exercise 5.13 Solution * Exercise 5.13 Solution Contd * Exercises Complete Exercises 5.14 – 5.17:These include all Balance Day Adjustments * Exercise 5.14 Solution * 945 945 Exercise 5.15 Solution * Exercise 5.16 Solution * 698 698 Exercise 5.16 Solution contd * Exercise 5.17 Solution * * STEP ONE : Take bad debt away from Debtor’s Control 80,550 – 550 = $80,000 Then Allowance for Doubtful debts 2% of new debtor’s control 80,000 x 2% = $1,600 But already have a balance of $600, so $1,600 - $600 = adjustment of $1,000 General journal… Increase bad debts expense (debit to increase expense); Decrease GST collected (debit to decrease liability) ; decrease debtors control (credit to decrease asset) Increase doubtful debts negative asset Bad and Doubtful Debts Example. 2, p. 140 * … General journal… Increase bad debts expense; Decrease GST collected; decrease debtors control Increase doubtful debts expense (E); increase allowance for doubtful debts (-A) Bad and Doubtful Debts Example. 2, p. 140 * STEP TWO: Debtor’s Control Ledger Balance $80,550dr debtor’s control asset. To decrease, add new line item for ‘Dad debts’. Add $550 credit (decrease asset), and decrease the balance to $80,000dr Bad and Doubtful Debts Example. 2, p. 140 * Bad and Doubtful Debts eg. 2 STEP THREE: Bad Debts Ledger Balance $1,000dr bad debts expense. To increase, add new line ‘Debtor’s control’. Add $500 debit (increase expense), and increase the balance to $1,500dr * Bad and Doubtful Debts eg. 2 STEP FOUR: GST Collected Ledger Balance $400cr. To decrease, add new line ‘Debtor’s control’. Add $50 dr, and decrease the balance to $350cr 350cr 400cr * Bad and Doubtful Debts cont’d: eg. 2, p. 140 STEP FIVE: Allowance for Doubtful Debts Ledger Balance of $600cr doubtful debts liability from the year. Debtor’s control = $80,000 (remember to use new balance) 2% of $