Dear Tutor I will have some specific questions on this topic despite i passed this one just for in-depth knowledge
XYC co has a balance of trade receivable pf $250000. It provides a specific allowance of 60% on a debt of $20000.General allowance 2%.charge to p/l?
TR--250000
IR debt--(20000*0,4)=8000
Doubtful debt-(20000*0.6)=12000
revised TR===230000
general allowance==(230000*0.02)=4600
revised tr====225400
why (4600+12000)=16400 is charged to p/l not 8000?
Ask the Tutor ACCA FA
irrecoverable debt and allowances
also except for allowance for receivable T account do I have to create specific allowance T account seperately then transfer to AFR such as here SA is 12000
debit ID-12000
CR SA-12000
in order to AFR balane i give the following journal entry
and I keep doubtful debt under Irrecoverable T account is this right?
in this right?
debit SA--12000
Credit AFR-12000
Debit ID-4600
Credit AFR-4600
5y ago#2There is a specific allowance of 60% x 20,000 = $12,000.
The general allowance is 2% x (250,000 - 20,000) = $4,600.
Therefore the total allowance required is $16,600.
Assuming there is no allowance brought forward from last year, then the cost of creating the allowance is $16,600.
The entry is Dr Irrecoverable and Doubtful debts expense account and Cr Allowance for receivables account.
(However you are not asked to prepare t-accounts in the exam)
Dear tutor does not Irrecoverable debt increase the allowance for receivable here why here is not added over 16600?
5y ago#4There is no mention of there being an irrecoverable debt in the question you typed!!!
yea understood now great
Dear Tutor sorry for this one
It provides a specific allowance of 60% on a debt of $20000. if 20000 amount's 12000 is specific allowance but what is the remaining amount (8000) considered?
Sign into reply to this topic.