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irrecoverable debt and allowance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › irrecoverable debt and allowance

  • This topic has 4 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • March 4, 2015 at 9:56 pm #231315
    saif02bd
    Participant
    • Topics: 52
    • Replies: 62
    • ☆☆

    at 1 jan 20×4,tarter co had total receivables of $380000.A specific allowance of $20000 had been made for a customer,drab..the general allowance for receivables was 2.5%.during the yr,drab went out of business owing tarter co $28000,none of which is expected to be recovered.At 31 dec 20×4,tarter jad total receivables of $420000.there were no specific allowances but the general allowance for receivables was increased to 3%.
    what is the charge in the SOPL for the yr to 31 dec for the allowance for receivables and irrecoverable debts??
    Ans: $11600

    March 4, 2015 at 10:09 pm #231316
    saif02bd
    Participant
    • Topics: 52
    • Replies: 62
    • ☆☆

    my calculation was:
    opening allowance=20000+(380000-20000)x2.5%=29000..
    closing allowance=(420000-28000)x3%=11760..
    SOPL:
    irrecoverable debt-decrease in allowance=28000-17240=10760(SOPL)
    # in the que as it is not mentioned that irrecoverable debt is written off,so we should write off irrec. debt from receivables first..
    ## why they didn’t deduct the irrec. debt from total receivables before calculating closing allowance..
    Sir plz help!!!

    March 5, 2015 at 7:06 am #231348
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54707
    • ☆☆☆☆☆

    Assuming that you have copied out the question correctly, then your answer is correct (10760).
    It would only be 11600 if the irrecoverable debt had been written off during the year, but the wording of the question as you have typed it does not say that.

    March 6, 2015 at 7:53 am #231436
    saif02bd
    Participant
    • Topics: 52
    • Replies: 62
    • ☆☆

    checked again..i hv posted the que correctly..!!
    thanks moffat sir..

    March 6, 2015 at 8:45 am #231448
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54707
    • ☆☆☆☆☆

    You are welcome 🙂

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