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Dear Mr, John
Need your help for the below question :
The basic method for Irrecoverable & allowance :- Total trade receivable -irrecoverable bad debt-Total allowance receivable (Specific + General Allowance) but the below example includes
Closing allowance :$93600
,Trade Receivable :1240800,
Debt 88800 and
general Allowance : 5%
Ans-52800,
what is method for calculating closing allowance and existing allowance , is there anything as decerese or Increase method ,Please update with method including given example? Appreciate !!!..Thanks
VictorThe allowance required at the end of the year is 5% x (1240800 – 88800) = 57,600
Therefore there is a decrease in the allowance of 93600 – 57600 = 36,000
Therefore the expense for the year (which I assume is what the question requires) is
88,800 – 36,000 = 52,800This is all explained in my free lectures on irrecoverable and doubtful debts. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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