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Define Inventories as per IAS-2? On January 1st 2020, the Ultima Inc has...

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Accounting

Define Inventories as per IAS-2?

On January 1st 2020, the Ultima Inc has normal balance of accounts receivable and allowance for bad debts of Rs.3,30,000 and Rs.23,000. Ultma recorded total sale of 9.5 million including credit sale of (1701 x 1000). During the period end other information is as follows:

  • Sales return of Rs. 50.5k
  • Sales Discount of Rs.10k
  • Cash Collection of Rs.2.9 million

Following accounts are proved to be bad debts;

Smith whose account of Rs. 30,000 was written off in the last year paid Rs.20k as final payment of the debt. Ultima also written off various bad debts of Rs.50k during the year and recovery of written off accounts receivable other than smith are Rs.3.3k.

Required: Pass journal entries for the period ended on 31st December 2020 and adjusting entry for uncollectible accounts expense assuming rate of allowance for bad debts is 0.08.

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