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taylor’s receivables ledger control account shows a balance of $7000. She has not yet recorded the following transactions: she wants to introduce a general allowance of 5% of receivables. A specific allowance is wanted for Webb’s Limited debt of $250. a debt of 625 specifically provided for last year is now definitely irrecoverable
Sir I am unable to understand how the answer comes to 556??
You have not said what the question requires (the amount of the allowance, or the expense for the SOPL)!
Anyway, if you have copied the question correctly, the answer is not 556. Does the book now give workings? (You should be using a Revision Kit from one of the ACCA approved publishers.)
Receivables = 7,000 – 625 = 6,375
Allowance = (6,375 x 5%) + 250 = 568.75
Expense = 568.75
It asks for the expense to be charged. and wont be subtract the specific allowance as well from 6375 to calcluate the general allowance. the options are
875
1181
600
556
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