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QUESTION 3 Gabriel ’s Party Supplies uses the net credit sales method to estimate doubtful debts....

QUESTION 3

Gabriel ’s Party Supplies uses the net credit sales method to estimate doubtful debts. Gabriel ’s Party Supplies is registered for GST. The balance in the Allowance for Doubtful Debts account on 1 July 2018 was $8,250.

The following transactions relate to Gabriel ’s Party Supplies for the year ending 30 June 2019.

10 July 2018

18 September

12 January

22 February 30June, 2019

Required:

Wrote off as uncollectable the amount of $649 owing on the account of M. Williams.

Re-established the account of J. Adams and recorded the collection of $1,980 in full payment of his account, which had been written off previously.

Received 60% of the $1,100 balance owed by M. Jordon and wrote off the remainder as uncollectable.

Wrote off the accounts of Biggs Ltd of $1,078.

Based on the past history Gabriel ’s Party Supplies estimates that it will not be able to collect 2% of its accounts receivable balance. Dalton Ltd. has an accounts receivable balance of $770,000 at 30 June 2019.

a. Prepare the general journal entries for each of the above transactions. Narrations are not required.

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Working note: T-account to determine amount to be recorded for June 30:

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