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In the solution to this qs they have not added the specific allowances in statement of P/L, they’ve taken the allowances as the current year’s allowances and subtracted from last year’s to calculate the inc/dec( I did this part too)
What I’m confused about is that why have they not added specific allowances in the statement of P/L because in the rest of the questions they have.
I am sorry but I only have the BPP revision kit, and so without being able to see the question I can not help you.
1.For calculating the charge/credit to SOPL for irrecoverable debts exp we will add written off debts to specific allowances first, and then subtract the inc/dec of allowance..
2. This year’s allowance included specific and general allowance, if not both, any one will be given, that we’ll take?
1. I have no idea why you want to add written off debts to specific allowance – it would make no sense.
2. It depends on the question – you would normally be told about any specific allowance and would be expected to calculate the general allowance yourself. The total allowance is the two added together.
Have you watched my free lectures on irrecoverable and doubtful debts?
Sorry this is a bit late but I haven’t been logged on in a while.
The question asks the total charge to the P&L in regard to the info given so the charge to the P&L is the irrecoverable debt for the period plus the change in allowances.
Irrecoverable debt was $8,900.
The previous allowance was $5,650. The new allowance is $3,516 therefore movement is $2,134. Movement has been reduced by $2,134 ie a credit.$8,900 – $2,134 = $6,766 charged to the profit and loss.
To be honest I haven’t been able to follow some of the explanations given in Kaplan very well and had to work it out on my own.
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