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I don’t understand this question. Pls help me sir.
At the start of the year, Joe had an allowance of $700 against receivables. During the year $450 of this amount went bad and $150 was received; the balance remained unpaid at the year end. Another amount of $170 went bad. A the year-end it was decided to provide for a new debt of $240.
What was the total irrecoverable debt expense for the year?The expense in the Statement of profit or loss is:
irrecoverable debts written off – any irrecoverable debts recovered + any increase in the allowance for receivables (or minus any decreases in the allowance).
You need to watch the free lectures on irrecoverable and doubtful debts.
i don’t understand how to find the allowance required at the end of the year?
Hi John
Q2 of the test refers. This was my working:
Rcvbls(173760-2040=171720). Gen.Allow.for Doubtful Debts(171720*2%=3434.40). Change Reqd to bring Allow.to this yr’s fig is (3434.40-5376=-1941.60 )which I credited the Allow.for Rcvbls with, together with the 3434.40 above. I then credited the Irrecov.Debt Exp with the 1941.60 to get a Bal.of $98.40. Could you kindly explain where I made a mistake?
Regards
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