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Q1. Jupiter Co has been notified that a customer has been declared bankrupt. The company had previously made an allowance for this debt. Which of the following is the correct double entry to account for this new information?
Ans. In Bpp kit: Allowance for receivables Dr
Receivables Cr.
My answer : irrecoverable debts Dr.
Receivables Cr.Q2. G Co has been notified that a customer has been declared bankrupt. G Co had previously made allowance for this receivable. Which of the following is the correct double entry?
Ans in Kaplan: Irrecoverable debts accountDr.
Receivables ledger control account Cr.Query : why are both the answers different when the scenario is same? In both the cases we first made an allowance and then decided to write off write off the receivables when companies went bankrupt. Please explain.
As I explain in my free lectures, both entries will end up giving the same end result. Because of this it is very unlikely that this would be asked in the real exam these days.
(Incidentally, I think maybe you are using an old Kaplan Kit because control accounts are no longer examinable in Paper FA)
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