Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

March 2025 ACCA Exam Results

Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

Reader Interactions

Comments

  2. hi Sir

    is it only under GAAP that when we write off a receivable we make the following posting?
    dr Allowance for receivable (SFP)
    cr receivable (SFP)

    in your lecture I see that write off is done debiting the irrecovable Bad bebt (from SPL)
    thanks

    • GAPP does not specify what the double entries are.

      You can do the entries any way you want as long as the expense in the SOPL and the allowance in the SOFP are correct.

      The way I show in the lectures is the easiest, fastest and safest for the exam. (And, of course, in the exam you won’t actually be showing the double entries anyway – just the end result.)

  3. Hi Sir , I would like to ask the following questions:
    In the Balance Sheet , we show 74000 , will the irrecoverable figure ever be shown ?

    Allowance for Receivables is an asset but ends with a Credit balance , is it a negative asset ?

    • The irrecoverable debts are removed from the receivables completely and are never shown separately in the Statement of financial position.

      Allowance for receivables is not an asset – it is effectively a negative asset and is subtracted from receivables on the Statement of financial position.

  4. Consolidated accounts & statments of cash flow has been a problem to understand. my exam is in april..computer based. am studing on my own & am having a problem with watching lectures..please help. thanks

  5. Plz help !! 44. Apple owns her own business selling dolls to stores. At 30 June 2008 she had the following balances in her books:
    Trade receivables: 62,900
    Allowance for receivables: (900)
    A balance of $2,000 due from X Co is considered irrecoverable and is to be written off. Y Co was in financial difficulty and Apple wished to provide an allowance for 60% of their balance of $1,600. She also decided to make a general allowance for receivables of 10% of her remaining trade receivables.
    What was the allowance for receivables in her Statement of Financial Position at 30 June 2008?
    $6,890 is the answer but i get 7764:(

      • I will answer you, but please ask this sort of question in the F3 Ask the Tutor Forum otherwise I may well not see it 馃檪

        After writing off the irrecoverable debt, receivables are 62900 – 2000 = 60900.
        There is a specific allowance of 60% x 1600 = 960.
        The is a general allowance of 10% of all the remaining receivables, so 10% x (60900 – 1600) = 5930.
        So total allowance = 960 + 5930 = 6890.

      • Because the debt was 1600 and it has been dealt with (even though only 960 is regarded as doubtful). If 960 is thought to be doubtful then presumable the rest of it is though to be OK and it would therefore be silly to have an extra (general) allowance on the rest of it.

      • in the question is stated that allowance for receivable is (900) .
        how comes that at end after write off and additional specifc and generic allowance in the statemtn of financial position there is no track of it?
        shouldn’t we actually expense the 5930-900 as 900 are already in the allowance?

  7. I need help with the below question:

    At 30 November 2008, Taylor鈥檚 general ledger included the following balances:
    Trade receivables $198,635
    Allowance for receivables at 1 December 2007 $3,643
    Taylor鈥檚 allowance for receivable should be revised to $1,345
    How should receivables be reported on Taylor鈥檚 Statement of Financial Position?

    A Current asset of $197,290, Current liability $1,345
    B Current asset of $199,980
    C Current asset of $198,635 Current liability $1,345
    D Current asset of $197,290

    I don’t get how come the answer is D, I can’t even find the correct answer amongst the choices, I thought it is the movement of the allowance is what we deduct or add to the receivables NOT the revised allowance!!! In this question, I believe 2,298 should be added to the receivables, please help.

      • Congratulations on passing 馃檪

        Sorry for not replying to your question – I did not spot it.

        However for others reading this, the answer is as follows:

        As at 30.11.2008 the receivables balance is 198,635, and as at the same date the allowances for receivables has been revised and stands at 1,345.

        So the current asset is 198,635 – 1,345 = 197,290.

      • Thank You! I must say Opentuition is such a great website. I am studying online and paying for my course, but I still come here for more support because the level of teaching is really good!

        Is it you who gives the lecture? If that’s you then you are really a fantastic lecturer. You helped me so much with my F2, now I have passed the first 3 papers on first attempt, thanks!

    • @hanadi3

      There is an increase of $12,560 and charged (expensed / debited) to income statement. Any decrease (or reversal) would be credited (as income) on the income statement.

      Allowance (or Provision) by its very nature has a normal balance on credit side (like a liability). When it increases, we will credit it and when decreases, it will be debited.

      HTH

Leave a Reply