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Entry for Writing Off Doubtful debt

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Entry for Writing Off Doubtful debt

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 23, 2015 at 5:51 pm #278592
    Sir Insanity
    Participant
    • Topics: 28
    • Replies: 44
    • ☆☆

    I’ve come across TWO entries, which one is right?

    1) Dr Irrecoverable Debt Exp., Cr Rec.

    2) Dr Allowance, Cr Rec.

    I believe it’s the second one, but, eg, in a question in the BPP kit, the answer proclaims it be 1)!

    October 23, 2015 at 7:57 pm #278618
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    In fact you can do either (there are no rules), but the first entry is by far the easiest to deal with.

    I do suggest that you watch the free lectures on irrecoverable and doubtful debts where this point is dealt with.

    October 23, 2015 at 8:48 pm #278629
    Sir Insanity
    Participant
    • Topics: 28
    • Replies: 44
    • ☆☆

    Actually, I have seen the concerning lectures. (Which explain the examples)
    And the answer eg for the expense does come out right, however, my issue regards a single question. This one:

    “A company has been notified that a receivable has been declared bankrupt. The company had previously provided for this doubtful debt. Which of the following is the correct double entry?

    ———— DR —————————– CR
    A Bad debts account ———— The receivable
    C Allowance for receivables —The receivable ”

    C seems to be, to me, logically the answer.
    Unfortunately, the kit says that the answer is A.

    What would you choose?

    October 24, 2015 at 8:16 am #278675
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    As I wrote in my previous reply, A is the better answer.

    However that would be a bad question to be asked in the real exam because A and C are both allowable.

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