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On 31 March 2014, the balance on the receivables control account of P Company is $425,700. The
bookkeeper has identified that the following adjustments for receivables are required:
Irrecoverable debt recovered $2,000
Specific allowance $2,400
It was decided that a further allowance for receivables of 2% should be made based on past events. The
allowance for receivables on 1 April 2013 was $1,900.What was the receivables expense for the year ended 31 March 2014?
A $6,966
B $8,866
C $8,966
D $10,866Please do not simply type out test questions and expect an answer. You must have an answer in the same book in which you found the question, so in future ask about whatever it is in the answer you are not clear about.
The allowance required is 2% x (425,700 -2,400) + 2,400 = $10,866
Therefore the increase in the allowance is $8,966
Therefore the expense for the year is 8,866 – 2,000. = $6,866
Have you watched my free lectures on irrecoverable and doubtful debts? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Sir the answer of the question is given in my book but i do not understand the method and the method that you do that i understand now thank you
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