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At 1 jan 2010 a company had an allowance for receivables of $44000. At 31 dec 2010 the company’s trade receivables were $749000. and it was decided to write off balances totalling $29000 as irrecoverable. In addition it was decided to adjust the allowance for receivables to 5% of the remaining receivables, based on past experience. What total figure should appear in profit or loss for bad debts and allowance for receivables, for the year to 31 dec 2010 ?
A $21000
B $65000
C $37000
D $ 22475Please do not simply set questions and expect an answer – presumably there is an answer in the same book in which you found this question.
Say what your problem is and then I will try and help!Have you watched the free lecture on Irrecoverable and Doubtful Debts?
(and why have you headed this ‘accrual and prepayment’? It has nothing to do with accruals and prepayments!!)
i’ve got the anwer. Yes i was doing a homework in accrual and prepayment and i put it by mistake. Anyway thank you mr john moffat.
WHAT THE CORRECT ANSWER PLEASE WITH LITTLE EXPLAIN
Jasbinda has prepared draft financial statements for the year ended 30 November 20X7. The followwg items still
require adjustment(1) The accounts do not include a cost for electricity for November 20X7 which is expected to be $750
(2) The accounts include a payment of $780 for rent made on 1 July 20X7 the payment Is for the 12 months to
30 June 20X8What is the net impact on profit when the appropriate adjustments are made for these items?
answer
1-Reduction of $2952-Increase of $295
3-Reduction of $1,205
4-Increase of $425
When the cost of electricity for November is included, the profit will reduce by 750.
Rent had been overpaid for 7 months, which is 455 overpaid. When this is removed the profit will increase by 455.
I do suggest that you watch the free lecture on accruals and prepayments.
A reduction of 750 and an increase of 455 does not equal an increase of 295!!
(it is a reduction)Hi,
for this question,
The accounts include a payment of $780 for rent made on 1 July 20X7 the payment Is for the 12 months to
30 June 20X8Can i know why its calculated as overpaid, when its says “1 July 20X7 the payment Is for the 12 months to 30 June 20X8) = July 20×7 till June 20×8 is 12mths is 12mths.
Appreciate if someone can help me with this, as im really confused with the question and answer.
Thank you
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