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Good evevning Mr John…The thing I cant understand is when we receive cash from our debtors, the general allowance will change too..
For example if I had £1000 receivables my general allowance percentage is 10%…So it means I probably dont get 100…But when I receive cash of 100, that figure of 100, decrease to 90….
Why is that…..100 shouldn’t be changed……So frustrating..so confusing…Thank you sir…
The general allowance is always a % of however much is owed by receivables at the end of the year.
If the general allowance is 10%, then if at the end of a year we have receivables of $1,000 then we want an allowance of $100.
If, on the other hand, receivables at the end of the year are only $900 then we want an allowance of $90.
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