ACCA FA · Guided practice (Show me how)
Chapter 8: Irrecoverable Debts and Allowances
Irrecoverable debts and the allowance for receivables
At the end of the first year of trading there is a balance on the receivables account of Harbour of $84,000.
On investigation, this amount is found to include a debt of $4,000 from C Ltd which is to be regarded as irrecoverable.
It also includes $5,000 owing from D Ltd and $1,000 owing from E Ltd, both of which are regarded as doubtful.
Harbour has a policy of maintaining a general allowance for receivables of 2%.
(a) Workings
Calculate the receivables figure after any write-off, and the allowance for receivables required at the year end.
(b) The financial statement extracts
Show the extracts from Harbour's statement of financial position at the end of its first year of trading and from its statement of profit or loss for that year.
Opening this exercise…