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Allowance for A/R

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Allowance for A/R

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • December 2, 2015 at 6:56 pm #287059
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    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

    December 3, 2015 at 7:22 am #287133
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    The general allowance = 10% (62,900 – 2,000 – 1,600) = 5,930
    The specific allowance = 60% x 1,600 = 960

    So 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 🙂 )

    December 3, 2015 at 8:25 am #287159
    racucamelia
    Member
    • Topics: 34
    • Replies: 39
    • ☆☆

    It is very clear now. You are a genius. 🙂

    I did the mistake to include the 1600 $ in general allowance.

    December 3, 2015 at 8:55 am #287177
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51532
    • ☆☆☆☆☆

    You are welcome (and everyone makes that mistake) 🙂

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