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the allowance for receivables brought forward from 2006 was 1200.during 2007 a debt of 75 required writing off.At the end of the year closing receivables were 100,000 and an allowance of 1.5% is required for receivables.
what is the charge to the statment of p/l for receivables expense for the year?100,000-75=99925×1.5%=1498.8
1498.8-1200=298.8 increase in allowance + irrec. debt 75=373.8is this wrong?
Because the question says that the debt was written off during the year, it means that the closing receivables are already after removing the debt.
So the allowance at the end of the year will be based on the 100,000.Otherwise your workings look to be correct.
Because the question says that the debt was written off during the year, it means that the closing receivables are already after removing the debt.
So the allowance at the end of the year will be based on the 100,000.Otherwise your workings look to be correct.
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