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Hi John,
please help me with the following probelm.
Apple has hr own business. At 30.06.2013 she has a balance on her A/R of 62900 $.
A balance of 2000 $ is considered irrecoverable and will be written of. Apple also wishes to provide an allowance for 60 % for a balance of 1600 $.
She has decided to make a general allowance for A/R of 10 % of her remaining amount from A/R.What is the allowance for A/R to include in Balance Sheet at 30.06.2013?
Thank you,
camelia
The general allowance = 10% (62,900 – 2,000 – 1,600) = 5,930
The specific allowance = 60% x 1,600 = 960So the total allowance is 5,930 + 960 = 6,890
(We remove the 1,600 when calculating the general allowance because we are having a specific allowance part of it and are therefore presumably confident that the rest of the debt is OK – we don’t want a general allowance on it as well 🙂 )
It is very clear now. You are a genius. 🙂
I did the mistake to include the 1600 $ in general allowance.
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