BUACC1507 - Accounting Fundamentals - Accounting Assignment Help

Assignment Task

Question 1 The unadjusted trial balance for the year ended 30 June 2020 for Churchill Trading is presented below. The business employs a periodic inventory system, and classifies other expenses as selling and distribution expenses, administrative expenses and finance costs.

Required: i. Present a detailed income statement for the year ended 30 June 2020, ensuring the statement provides the detailed calculation of cost of sales and classifies all other expenses as one of selling and distribution expenses, administrative expenses and finance costs. ii. Present the statement of changes in equity for the year ended 30 June 2020. You may assume no capital contributions were made during the year. iii. Present a classified statement of financial position as at 30 June 2020. Classify assets and liabilities as current or non-current.

Question 2 (a) Assume that the business has received notification on 15 April 2020 that a debtor owing $1,850 has declared bankruptcy. Prepare the general journal entry to write-off this account as a bad debt under each of the following methods:

(i) The direct write-off method

(ii) The allowance method

(b) Return to the scenario outlined in part (a), assume on 22 August 2020 the debtor unexpectedly remits full payment for the previously written-off account. Prepare the general journal entry to re-establish this debt and record payment under each of the following methods: (i) The direct write-off method (ii) The allowance method

(c) Compare and contrast the direct write-off method of accounting for receivables with the allowance method. Ensure you discuss the reasons why the allowance method is generally regarded as being superior.

(d) Your textbook and lecture slides published on Moodle present slightly different treatments for the recovery of a previously written off bad debt under the allowance method. The textbook treatment involves the crediting of the recovered debt to an income account called ‘bad debts recovered’ whereas the lecture slides credit the recovered debt to the allowance account. In the context of the ageing method, discuss these two different treatments.

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