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July 30, 2020 at 11:32 pm
Hello, in question 2 – why are we calculating the new allowance only of the receivables of $185K and ignoring the previous year? Is it a tricky question and because it is only mentioned that the company had receivables of $140K and not calling it a balance we ignore it?
John Moffat says
July 31, 2020 at 9:02 am
The allowance required at the end of the year is always calculated on the receivables at the end of the year.
When the question says that the receivables on 31 December are $140,000 it does not need to use the word ‘balance’ because it can only be the balance!
Did you watch the free lectures on this before attempting the test?
April 29, 2020 at 4:29 pm
Hello sir, I think there is no any other indication for Ken except this small point at starting the question ( This including…) otherwise we are not supposed to Credit the receivable for receiving the cash which had been previously written off. In stead we will record this amount (e.g: 1800) as sundry income. Thanks in advance
April 7, 2020 at 1:11 am
Hello sir ,
Question 4 is still confusing in Ken part – 1800. I understand that 1800 was is to be debited from the recivabkes and credit irrecoverable exp. so if it’s debited it means that it will be 1. 50,000- 2500= 47500 2. Then 47500- 1800( debiting the receivables ) = 45700 3. 45700 + 1800 = 47500 then crediting the receivables again.
Are we suppose to leave the 1800 and not debit it and add to it again
For the answer to be 49300 it means the receivables was not debited with the 1800.
Please kindly clarify .
Thanks a bunch
April 7, 2020 at 7:59 am
The cash received should not have been entered to the receivables account because the debt had previously been written off. However, the question says that it has been entered (and because it was cash received it will have been credited). Since it should not have been entered the credit entry needs to be cancelled and so we will debit receivables to cancel it.
November 21, 2019 at 11:28 pm
I really do not understand sir. When the question said “adjust the allowance for receivables to the equivalent of 5%”, does it mean that 93 600 must be reduced to 57 600? If that is the case, then shouldn’t the 57 600 (seeing as it is now the balance on the allowance for receivables account) be debited to the irrecoverable and doubtful expense account (88 800 + 57 600=146 400) and then credit the irrecoverable and doubtful debt expense account by (93 600 – 57 600=36000)? That would then leave a balance on the irrecoverable and doubtful debts expense account of (146 400 – 36 000=110 400)? I am trying to do it in the T-accounts way because I understand better that way.
November 22, 2019 at 7:36 am
There is already a credit balance on the allowance account of 93,600 from last year. We need to reduce this to 57,600 and we therefore debit the allowance account with the difference of 36,000 and credit the irrecoverable debts expense account.
For the irrecoverable debt, we debit the irrecoverable debts expense account with 88,800.
This leave a balance on the irrecoverable debts expense account of 52,600 to be transferred to the SOPL.
November 23, 2019 at 12:20 am
Yes I did watch the lectures. I re-watched example 3 and there it was! Thank you!
November 23, 2019 at 10:40 am
You are welcome 🙂
March 3, 2019 at 5:12 pm
traceyjaybee: Very true 🙂
March 3, 2019 at 12:54 pm
Question 3 was mean! It really highlighted that I need to RTQ!!!
March 10, 2019 at 8:47 pm
Darn, true! I will need to read questions more carefully next time as I ended up with 98.4..
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