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solve this f3 ques:
(1) X owes Y $2,500. The debt is over six months old and Y has decided to write it off. He also wishes to set up an allowance for receivables of $ 5,600. What is the double entry to record these transactions ?
[Debit or Credit / and the amount : $ 2500, $ 5600 ,$ 8100 ]
For sales ledger control account
For receivable expense
For allowance for receivables
For sales
———————————————————————————-
(2) S has decided to change her accounting policy for the depreciation of non-current assets
to show a lower profit figure in her income statement.
WHICH qualitative characteristic of financial information, as outlined in the IASB’s framework for the preparation & presentation of financial statements, would be breached if S changed her accounting policy ?
-completeness
-comparability
-relevance(1) Write off an irrecoverable debt:
Dr Bad debts (receivable exp) 2500
Cr Receivables 2500Increase the allowance for bad debts:
Dr Bad debts (receivable exp) 5600
Cr Allowance 5600Total: Dr 8100 Cr 8100
(2) – Comparability
Changing the depreciation method is a change in accounting ESTIMATE, not policy – IAS 8.
To the first question:
Is it :
(i) Dr sales -$ 2500
Dr receivable exp- $ 5600
Cr sales ledger control – $ 8100(ii) Dr receivables exp – $ 8100
Cr allowance for receivable – $ 5600
Cr sales ledger control – $ 2500(iii) Dr allowance for receivable- $ 5600
Dr sales ledger control – $ 2500
Cr Receivable exp – $ 8100(iv) Dr receivable exp – $ 8100
Cr sales ledger control – $ 8100
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