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QUIZ – AA015 TOPIC 7 (Introduction of bad debt)
QUESTION
1.
Define of Account Receivable.
(1.5 Mark)
2.
Define bad debt.
3.
Give four causes of bad debt?
(2 Marks)
4.
State two methods to account for bad
debt.
(1 Mark)
5.
State two basis in allowance method.
(1 Mark)
6.
What is the journal entry to record
bad debt using:
a.
Direct Write-Off Method
b.
Allowance Method
(2 Marks)
7.
How to calculate net realizable
value.
(1.5
Mark)
ANSWER
QUIZ –
AA015 TOPIC 7 (Introduction of bad debt)
1.
Define
of Account Receivable.
Accounts
Receivable refers to cash/cheque owed by customers √ to another entity
in exchange for goods or services that have been delivered or used √ but
not yet paid for √
(3√ x ½ = 1.5 Mark)
2.
Define
bad debt.
Bad debts is an amount of Accounts
Receivable that is not collectible √ after the due date of credit terms
√
(2√
x ½ = 1 Mark)
3.
Give
four causes of bad debt?
i.
Bankruptcy
of a debtor √
ii.
Insane
debtor √
iii.
The
death of the debtor √
iv.
Untraceable
debtor √
(4√
x ½ = 2 Marks)
4.
State
two methods to account for bad debt.
i.
Direct
Write-Off Method √
ii.
Allowance
Method √
(2√ x ½ = 1 Mark)
5.
State
two basis in allowance method.
i.
Percentage
on Accounts Receivables √
ii.
Percentage
on net credit sales √
(2√ x ½ = 1 Mark)
6.
What
is the journal entry to record bad debt using:
a.
Direct
Write-Off Method
|
Date |
Details |
Dr (RM) |
Cr (RM) |
|
31 Dec. |
Dr Bad Debt Expenses √ Cr
Accounts Receivable √ |
xxx |
xxx |
(2√
x ½ = 1 Mark)
b.
Allowance
Method
|
Date |
Details |
Dr (RM) |
Cr (RM) |
|
31 Dec. |
Dr Bad Debt Expenses √ Cr
Allowance for Doubtful Accounts (AFDA) √ |
xxx |
xxx |
7.
How
to calculate net realizable value.
Accounts Receivable
√
Deduct √ :
Allowance for Doubtful Account √
(3√
x ½ = 1.5 Mark)
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