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At 1 January 20X1, there was an allowance for receivables of $3,000. During the year, $1,000 of debts
were written off as irrecoverable, and $800 of debts previously written off were recovered. At
31 December 20X1, it was decided to adjust the allowance for receivables to 5% of receivables which
are $20,000.
What is the total receivables expense for the year?
A $200 debit
B $1,800 debit
C $2,200 debit
D $1,800 creditSir here , we are not subtracting Irrecoverable debt expense from Receivables to find closing allowance. In some question we do. Can you please tell me the difference when we have to subtract and when we do not.
This question says that the irrecoverable debts were written off during the year. Therefore the receivables balance at the end of the year is already after removing the debts.
Other questions say that the irrecoverable debts were discovered at the end of the year, and therefore they then do need removing from the balance on receivables.
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