Hello, I am seeking clarity on how you arrived at the receivables figure in question one vs question two. The total irrecoverable debt and allowance were deducted from the receivables to get the ending figure in question 1. However, in question 2 why weren’t the figures calculated and added up and subtracted from the balance in the receivables account?
Are you referring to the examples in the lecture notes that I work through in the free lectures? Because the treatment is the same in both examples. We subtract the irrecoverable debts from the receivables, and in the SOFP we show the final receivables figure less the allowance for receivables.
I have a question – do we calculate general allowance after taking off the irrecoverable debts only ( example one) or after irrecoverable + doubtful ? (example 2) Are there any rules to follow ?
The general allowance is calculated after removing any irrecoverable debts and after subtracting any specific allowance. This is explained in the lectures.
Hello, I think in example 2 one figure is missing. SOPL Irrecovable and doubtful debts expenses: 12 0560 (doubtful debts expenses + general allowance)+ 8 000 (Irrecovable one, John and Paul )= 20 0560$ in total.
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Hello, I am seeking clarity on how you arrived at the receivables figure in question one vs question two. The total irrecoverable debt and allowance were deducted from the receivables to get the ending figure in question 1. However, in question 2 why weren’t the figures calculated and added up and subtracted from the balance in the receivables account?
Are you referring to the examples in the lecture notes that I work through in the free lectures? Because the treatment is the same in both examples. We subtract the irrecoverable debts from the receivables, and in the SOFP we show the final receivables figure less the allowance for receivables.
I think there’s a mistake in example 2.
Specific provision of $10,000 was not subtracted in SOFP.
Could anybody confirm this please?
No – it is correct. The allowance in the SOFP is the total of the specific and the general allowances.
hello
I have a question – do we calculate general allowance after taking off the irrecoverable debts only ( example one) or after irrecoverable + doubtful ? (example 2)
Are there any rules to follow ?
Thank you !
The general allowance is calculated after removing any irrecoverable debts and after subtracting any specific allowance. This is explained in the lectures.
Hello, I think in example 2 one figure is missing.
SOPL Irrecovable and doubtful debts expenses: 12 0560 (doubtful debts expenses + general allowance)+ 8 000 (Irrecovable one, John and Paul )= 20 0560$ in total.
There is no figure missing.
The expense in the SOPL is the total of the irrecoverable debts and the change in the allowance.