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Question 5 (5 marks) On 31 May, Hilltop Floral Supply had a $155000 debit balance...

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Question 5 (5 marks) On 31 May, Hilltop Floral Supply had a $155000 debit balance in Accounts receivable and a $6800 credit balance in Allowance for doubtful debts. During June, Hilltop made: a. Sales on credit, $545000 (ignore cost of sales) b. Collections on account, $582000 c. Write-offs of bad debts, $6000. Required: a) Record sales and collections on account. Then record bad debts expense ( 1% of credit sales) and write-offs of customer accounts for June using the allowance method. Show all June activity in Accounts receivable, Allowance for doubtful debts and Bad debts expense (post to these T-accounts). b) Suppose that Hilltop used a different method to account for bad debts. Record sales and collections on account. Then record bad debts expense for June using the direct write-off method. What additional journal entries are needed if Hilltop later collected the bad debt written-off in June? (Hint: the accountant first needs to re-instate the accounts receivable before recording the cash collection)

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