Irrecoverable Debts and Allowances Example 2

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  1. Avatar of robgarise robgarise says:
    May 3, 2013 at 6:48 am

    I have problems playing the lectures during the day (7.30am – 6pm) What could be the problem?

  2. Avatar of mahoysam mahoysam says:
    February 21, 2013 at 8:27 am

    I need help with the below question:

    At 30 November 2008, Taylor’s general ledger included the following balances:
    Trade receivables $198,635
    Allowance for receivables at 1 December 2007 $3,643
    Taylor’s allowance for receivable should be revised to $1,345
    How should receivables be reported on Taylor’s Statement of Financial Position?

    A Current asset of $197,290, Current liability $1,345
    B Current asset of $199,980
    C Current asset of $198,635 Current liability $1,345
    D Current asset of $197,290

    I don’t get how come the answer is D, I can’t even find the correct answer amongst the choices, I thought it is the movement of the allowance is what we deduct or add to the receivables NOT the revised allowance!!! In this question, I believe 2,298 should be added to the receivables, please help.

    • Avatar of mahoysam mahoysam says:
      March 29, 2013 at 2:30 pm

      Never mind, I passed my exam.

      • Avatar of johnmoffat johnmoffat says:
        March 29, 2013 at 4:42 pm

        Congratulations on passing :-)

        Sorry for not replying to your question – I did not spot it.

        However for others reading this, the answer is as follows:

        As at 30.11.2008 the receivables balance is 198,635, and as at the same date the allowances for receivables has been revised and stands at 1,345.

        So the current asset is 198,635 – 1,345 = 197,290.

        • Avatar of mahoysam mahoysam says:
          March 31, 2013 at 1:22 pm

          Thank You! I must say Opentuition is such a great website. I am studying online and paying for my course, but I still come here for more support because the level of teaching is really good!

          Is it you who gives the lecture? If that’s you then you are really a fantastic lecturer. You helped me so much with my F2, now I have passed the first 3 papers on first attempt, thanks!

  3. Avatar of ad555 ad555 says:
    May 31, 2012 at 12:07 pm

    excuse me dear friends…..how will be the calculation if bad debts are recovered….?????

  4. Avatar of enikuomehin enikuomehin says:
    May 30, 2012 at 1:17 am

    THANKS ALOT FOR THE TUTOR,GOD BLESS YOU ALL

  5. Avatar of roydnyika roydnyika says:
    April 23, 2012 at 1:01 pm

    simply expense the increase only in the income statement and subtract the total (original provision plus increase) from recicievables in the balance sheet

  6. Avatar of abdulhakeem abdulhakeem says:
    February 18, 2012 at 9:49 am

    true

  7. Avatar of hanadi3 hanadi3 says:
    July 16, 2011 at 12:14 pm

    was there an increase in allowance of 12560 or decrease? confused :(

    • Avatar of Shunmas Shunmas says:
      September 15, 2011 at 5:14 am

      @hanadi3

      There is an increase of $12,560 and charged (expensed / debited) to income statement. Any decrease (or reversal) would be credited (as income) on the income statement.

      Allowance (or Provision) by its very nature has a normal balance on credit side (like a liability). When it increases, we will credit it and when decreases, it will be debited.

      HTH

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