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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
Further adjustments are to be made as follows:
(1) No entries have been made in respect of cash of $1,320 received from Jeffrey whose balance had been written off last year(2) At 30 September an allowance is required against a balance of $1,950 due from John as well as a general allowance of 1.5% of remaining debts
What figure will be reported in the statement of financial position (balance sheet) at 30 September for receivables?
sorry mate, i have noticed i made a mistake just after other mail. it is kind of fiddly to write in here.
Now new rec. allowance should be specific allowance 1950+general all. 1326= 3276
bf balance on allowance credit side 2490 increased to 3276. difference 786 credit allowance, debit bad &doubted expense by 786. IS
Balance sheet
current assetrecivable 90350
less allowance (3276)
net receivable= 87074o/p bal of receivables 90350- specific allowance (1950)= $88400
This amount 88400 is the remaining debts.general allowance is 1.5% of 88400 = $1326
Thus, total allowance = 1950+1326= $3276
why do we deduct specific allowance from receivables and again add specific allowance to general allowance and deduct from receivables. why are we deducting 1950 twice from receivables
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