TQ1: CHAPTER 5 - BAD AND DOUBTFUL DEBTS

An allowance for doubtful debts is recognised

• A- when debtors become bankrupt.

• B- when debtors cease to be in business.

• C- when a business is hopeful of collecting a debt but believes that it may not

  be able to.

• D- to write-off a debt.

The accounting entries to record allowance for doubtful debts are:

• A- Dr Allowance for doubtful debts account; Cr Receivables

• B- Dr Expense account; Cr Allowance for doubtful debts account

• C- Dr Allowance for doubtful debts account; Cr Expense account

• D- Dr Receivables; Cr Allowance for doubtful debts account

What is the journal entry for writing off a bad debt?

• A -Debit Receivables Credit Bad debts

• B- Debit Bad debts Credit Receivables

• C- Debit Payables Credit Bad debts

• D- Debit Bad debts Credit Payables

A company had an allowance for receivables of 19,000,000 KHR at 1 January

Year 8.

At 31 December Year 8, total receivables were 526,000,000 KHR. It was decided

to write off debts totaling 36,000,000 KHR and to adjust the allowance for

receivables, on the basis of past experience, to 5% of the remaining receivables.

What amount should be included in the company's income statement (profit and

loss) for the year to 31 December Year 8 for the total of debts written off and the

movement on the allowance for receivables?

• A/ 43,300,000 KHR

• B/ 41,500,000 KHR

• C/ 60,500,000 KHR

• D/ 30,500,000 KHR

At 30 September Year 8, a company's allowance for doubtful debts was 40

million KHR. This represented five per cent of the receivables at that date.

At 30 September Year 9 receivables were 725 million KHR. It was decided to

write off 35 million KHR in debts as bad, and to keep the allowance for doubtful

debts at five per cent of receivables.

What should be the charge in the income statement (profit and loss) for the year

to 30 September Year 9 for bad and doubtful debts?

• A/ 38,750,000 KHR

• B/ 40,500,000 KHR

• C/ 29,500,000 KHR

• D/ 31,250,000 KHR

A business had receivables at 30 June 20X6 of 75,600,000. During the year to 30

June 20X7 credit sales totalled 502,600,000 and 488,300,000 KHR was received

from credit customers. A bad debt of 7,900,000 KHR was written off during the

year and the allowance for doubtful debts is to remain at 2% of the receivables

figure.

What is the charge for bad and doubtful debts to profit and loss (the income

statement) for the year ending 30 June 20X7?

• A/ 7,900,000 KHR

• B/ 8,028,000 KHR

• C/ 1,640,000 KHR

• D/ 9,540,000 KHR

At 31st December 20X8 a company’s trade receivables totalled 864,000,000

KHR and the allowance for irrecoverable debts was 48,000,000 KHR.

It was decided that debts totalling 13,000,000 KHR were to be written off, and the

allowance for irrecoverable debts adjusted to 5% of the receivables.

Which of the following are the correct figures for trade receivables (after

deducting the allowance) and for the total expense of bad and doubtful debts?

• 
• 
• 
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At 1st July 20X8 a company had an allowance for irrecoverable debts of

83,000,000 KHR.

During the year ended 30th June 20X9 debts totalling 146,000,000 KHR were

written off. At 30th June 20X9 it was decided that an allowance of 218,000,000

KHR was required for irrecoverable debts.

What figure is the total expense for bad and doubtful debts for the year ended

30th June 20X9?

• A/ 155,000,000 KHR

• B/ 364,000,000 KHR

• C/ 281,000,000 KHR

• D/ 11,000,000 KHR

At 31st December 20X8 a company’s receivables totalled 400,000,000 KHR and

an allowance for irrecoverable debts of 50,000,000 KHR had been brought

forward from the year ended 31st December 20X7.

It was decided to write off debts totalling 38,000,000 KHR and to adjust the

allowance for irrecoverable debts to 10% of the receivables.

What is the correct charge for bad and doubtful debts the year ended 31st

December 20X8?

• A/ 74,200,000 KHR

• B/ 51,800,000 KHR

• C/ 28,000,000 KHR

• D/ 24,200,000 KHR

At 30th September 20X7, Zed Ltd had an allowance for irrecoverable debts of

37,000,000 KHR. During the year ended 30th September 20X8 the company

wrote off debts totalling 18,000,000 and at the end of the year it is decided that

the allowance for irrecoverable debts should be 20,000,000.

What is the total expense for bad and doubtful for the year ended 30th

September 20X8?

• A/ 35,000,000 debit

• B/1,000,000 debit

• C/ 38,000,000 debit

• D/ 1,000,000 credit