Learning Outcome: Define cash and accounts receivable and explain the recognition and valuation
of receivables.
Question 1.
(4 Marks)
Blue Star LLC sold goods worth $50,000 to Reem Bros on Credit on 1" April 2019. On June 20
Reem Bros paid $45000 and the balance was written off as uncollectible. On September 5th Reem
Bros paid the Balance amount.
Required:
Journalize the above transaction in the Books of Blue Star LLC under the Direct Write Off Method
Question 2.
(6 Marks)
On 1 January 2020, Biblos LLC has an Account Receivable Balance of $200000. Past estimates
show that 20% of the receivables are bad every year.
On June 10th Max LLC (a customer) defaulted on a $1000 payment. It was written off as bad debt
On October 5th, $1000 was recovered from Max LLC.
Required:
Journalize the above transactions in the books of Biblos LLC under Allowance Method
Question 3.
(10 Marks)
Gama Manufacturers received 60-day 10% note for $30,000, dated March 21 2021 from a customer
Prime LLC
as a settlement for an account which was due.
Required:
1. Determine the Due date of the note
2. Determine the Interest revenue
3. Determine the Maturity Value
You are also requested to journalize the transactions:
1. If the note received is honoured on due date
2. If the note received is dishonoured on due date
