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33 Jessie’s trial balance at 30 September 20X0 included:
Debit $ Credit $
Receivables ledger control account 90,350
Allowance for doubtful debts brought forward 2,490
The following information is also available:
(1) No entries have been made in respect of cash of $1,320 received from Jeffrey whose balance had been written
off last year, and
(2) At 30 September 20X0 an irrecoverable balance of $1,950 is to be written off and the debtors allowance is to
be adjusted to 1·5% of the remaining balance
What figure will be reported in the statement of financial position at 30 September for receivables?
A $89,564
B $85,754
C $87,074
D $88,994Receivables: 90,350
less 1,950 (write-off irrecoverable debts)
less 1.5% of remaining 88,400 (i.e. less 1,326)And we receive 87,074 left in Receivables to be reported in SOFP.
Notes:
“Allowance for doubtful debts brought forward 2,490” – doesn’t matter for calculation of receivables in SOFP.
“(1) No entries have been made in respect of cash of $1,320 received from Jeffrey” – doesn’t matter for calculation of receivables in SOFP for current year, because such receivables had been already written off from Receivables a/c in previous year.
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Gross Receivables=$(90,350-1,950)=$88,400.
SOFP:
receivables $88,400
allowance ($1,326)
=net recei. $87,074.- Topics: 0
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27074 is corect answer
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87074 is corect answer
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opening balance of receivable ledger control account is written on debit side and receipts or bad debts are written on credit side…and allownce for bad debts are not written…so:
opening balance=90350 , receipts=1320 . bad debts=1950
1320+1950=3270
90350-3270=87080
the nearest answer is 87074 so option c is correct answer…did u get that?Hey Bro your explanation is very clear, but I didn’t understand how you calculate the allowance (1326). Thank you in advance.
Mehrubon wrote:Hey Bro your explanation is very clear, but I didn’t understand how you calculate the allowance (1326). Thank you in advance.
Receivables balance before adjustments = $90,350
Less: irrecoverable debt = ($1,950)
Receivables balance c/f = $88,400The allowance is calculated on this amount.
Allowance for doubtful debts = %88,400*1.5% = $1,326Are you clear now?
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