Condensed Computer Ltd uses the net credit sales method for estimating doubtful debts and has...
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Condensed Computer Ltd uses the net credit sales method for estimating doubtful debts and has observed that on average 3% of all credit sales will be not be collected.
On 1 July 2013 the Balance in Allowance for Doubtful Debts ledger was $58 900.
On 10 October, 2013 a Bankruptcy notice in the financial press revealed that the business of Jack Champion (currently an Account Receivable) had gone into Liquidation and would not be able to pay any of their outstanding debts. It was decided that the $14 530 owed to our business by Jack Champion would be written off as a Bad Debt.
On 22 January, 2014 the remaining assets of Jack Champion were sold and realised more than was originally expected and he decided to pay $6 250 of the debt that he originally owed us.
On 30 June, 2014 it was decided that an adjusting entry would be required in the books to account for the estimated Allowance for Doubtful Debts.
Total Sales for the year ending 30 June, 2014 were $2 500 000, of which 30% had been made on a Cash Sales basis.
Required: Prepare the General Journal entries to record the above information for Condensed Computer Ltd. Narrations are not required.
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