ACCY112 - Accounting In Organizations, Johanna Owns Campus Fashion Case Study - Accounting Assignment Help

Assignment Task

Johanna owns Campus Fashion.

Johanna owns Campus Fashion. From its inception, Campus Fashion has sold goods  on 25% cash and the remaining on a 90-day credit basis. It is the company policy to  use the allowance method to account for bad debts and the end of financial year is at  31 December. By the end of August 2020, Campus Fashion had the following account balances in its  ledge accounts: 

• Debits Credits
• Accounts Receivable $270,556
• Allowance for Doubtful Debt $12,300
• During 2020, Campus Fashion’s total sales revenue, inclusive of GST, were $921,800  of which $9,350 of the credit sales were returned due to defects. 
• The following transactions has incurred between September to December 2020  (transactions are GST inclusive). 
• Sep 15 Wrote off as bad the accounts for Jamesin Co Ltd, $3,619 and F.Belows  $5,033. 
• 25 Re-established the account of R.Simons and recorded the collection of $2,360  in full payment of his account which was previously written off as a bad debt. Nov 7 Received from EZY Outlet, 60% of the $2,265 owing. The balance remaining  was written off as a bad debt. 
• 28 Received $1,529 from Shark Fashion in full payment of his account, which  had been written off earlier as uncollectable. 
• Dec 31 Estimated bad debts expense for the year to be 2% of net credit sales. 
• The company had collected $57,000 of accounts receivable, from 1 September to 31  December 2020.

Required (round your calculations to the nearest dollar value):  
a) Prepare the necessary general journal entries for the above listed transactions. Just remember to include the recording of GST. 
b) Determine the net realisable value of accounts receivable, the value that would  be shown on balance sheet. You are required to use running balance or T  accounts to determine gross accounts receivable and Allowance for doubtful debt  account balances. 
c) Assume that instead of adjusting the allowance for doubtful debts based on net  credit sales, the estimate of uncollectable accounts is based on an ageing of  accounts receivable and that 5% of the accounts receivable as at 31 December  2020 was estimated to be uncollectable. Determine and prepare: 
 

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