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At 30 June 20X5 a company’s allowance for receivables was $39,000. At 30 June 20X6 trade receivables totalled $517,000. It was decided to write off irrecoverable debts totalling $37,000 and to adjust the allowance for receivables to the equivalent of 5% of the trade receivables based on past events.
What figure should appear in the statement of profit or loss for the year ended 30 June 20X6 for these items?
Q> how do you do this question? I keep getting the wrong answer.
I explain how to do it in my free lectures.
If you type your solution then I will explain why you are getting the wrong answer 🙂
I have but I must have missed something
My workings:
carry amount at end of period $517,000 – irrecoverable debt of $37,000 to get the net receivables.
then net receivables x 5% to get allowance for this period and then subtract that from the net receivables.
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