Camel Ltd traditionally estimated its allowance for doubtful debts as a percentage of net credit sales for the year. An analysis of the variance between the allowance amount and the actual bad debts written off for the past 5 years has shown significant unfavorable discrepancies. In the previous year (ended 30 June 2022), the allowance was estimated at $24,000, but bad debts written off during the current year were $11,200 more than allowed for. Consequently, the accountant has decided to change the method of estimation from a percentage of net credit sales to an analysis of the accounts receivable balances. This analysis estimated that the allowance for doubtful debts should be $35,600 as at 30 June 2023 (the current year).
Required:
Show the following for the year ended 30 June 2023:
The ledger account for the allowance for doubtful debts