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What I mean is this. 370,000 – 8000 = 362,000.
362,000 * 0.05 = 18,100.
This is an increase in allowance because it’s higher than opening allowance.18,100 – 14,000 =4,100
This will be credited to allowance for receivables and debited to irrecoverable debt.
Which is 8000+4100=12,100.
I don’t understand it when you said the allowance brought forward is irrelevant.Really? But I thought that after subtracting the irrecoverable debt from the trade receivables and making general allowance of 5% of the balance, I will now subtract the new allowance from the old. If there is an increase in allowance it will be credited to allowance for receivables and debited to irrecoverable debt and vice versa. Now you mean the allowance brought forward is not relevant.
At 31 December 2013 a company had receivables of $280,000 and an allowance for receivables of $14,000.
At 31 December 2014 they had receivables of $370,000.
It was then decided to write off a debt of $8,000 as irrecoverable, and to have a general allowance of 5% of remaining debts.
What balance will be on the Allowance for receivables account at 31 December 2014?
The only thing I don’t understand in this question is how to use the Trade receivables brought forward, I understand the rest of the question. I don’t know if I have to add old trade receivables to the new one before subtracting the irrecoverable debt and then make the general allowance on the remaining trade receivables. Can you please explain?
Pardon me Sir, the accum dep is 25000, where did get 30000 subtracted from the 120000? Is it original cost of the other machine?
At 31st Oct 2013 a biz had machine with a cost of $120,000 and with accumulated dep of $25,000. On Jan 1st 2014, they sold a machine for $10,000. This machine had originally cost $30,000 on 1 Apr 2012. The business had a dep policy of charging straight line dep at the rate of 20% per annum on a monthly basis. What is the dep exp for the year ended 31st Oct 2014?