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Hi sir,
I have confusion in calculation
Case 1-Trade recievable totalled 864000 and allowance receivable was 48000, it was decided debts totalling 13000 and allowances adjusted to be 5%.
Here need to calaculate allowance for receivable.
So it is calaculated as
Allaowance receivable=(864000-130000)x5%But in others other question it is calculated different.
Case 2-Trade receivable was 863000 and it was written off balance totalling 23000.the allowance receivable adjusted to equilavent 5%.Here allaowance is calculated as
863000×5%
Debts are not subtracted to find allowance.Case 3-Trade receivable 1232000 of 600000 which identified as unrecoverable and was written off ,allowance adjusted 5% of remaing trade receivables.
Allowance receivable calculated as =(123200-60000)x5%My question is why in every question the allowance receivable is calculated different?
Second question
If we wanted to find out to i
Total irrevoverable debts in question how help me.generally calculate,i watched videos but still not clear.It depends on the wording of the question. If the irrecoverable debts had been written off during the year then the general allowance is calculated on the receivables balance given in the question (because it is already after subtracting the irrecoverable).
On the other hand, if (as in case 1) you are given the receivables at the end of the year and are told it is then decided to write of irrecoverable debts, then you need to remove the irrecoverables before calculating the allowance.
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