60.1K

Verified Solution

Link Copied!

RUESTION 3 On 1 January 2020, Nothing Else Bhd (NEB) had Accounts Receivable RM278,000, Notes Receivable RM60,000 and Allowance for Doubtful Accounts RM26,400. NEB prepares financial statements annually at 31 December. During the year, the following selected transactions occurred: 20 January 2020 NEB sold RM48,000 of merchandise to Matters Bhd (MB), terms n/30. 20 February 2020 MB forwarded a notice to NEB asking for a longer credit period for the sales amounting to RM48,000 in the previous month. NEB agreed to extend the credit period and convert the remaining balance of account receivable to 9%,90-day note receivable. 19 May 2020 NEB managed to collect MB note receivable in full. 25 August 2020 NEB converted a RM8,000 account receivable of Wayward Bhd (WB) to 7\%, 90-day note receivable in settlement of a past due balance on account. 25 November 2020 The WB note receivable was dishonored. WB is not bankrupt and future payment is anticipated. REQUIRED: (a) Prepare the appropriate journal entries to record the above transactions for Nothing Else Bhd. Please show your calculations. (b) Explain the difference between accounts receivable and notes receivable. (c) There are basically two methods of recognizing bad debt expense: i. direct write-off method, and ii. allowance method. Discuss the reasons why one of the above methods is preferable to the other and the reasons why the other method is not usually in accordance with IFRS. (d) Amani Bhd has the following selected balances for its accounts receivables at 31 December 2023: BKAR1013 Financial Accounting \& Reporting I Amani determines that Granite's receivable was impaired by RM5,000, and Marble's receivable was totally impaired. Both Quartz Stone's and Concrete's receivables were not considered impaired. Amani also determines that a composite rate of 3% was appropriate to measure impairment on all other receivables. Determine the total impairment for Amani's receivables for the year 2023

Answer & Explanation Solved by verified expert

See Answer