Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Irrecoverable debts and allowance for receivables
- This topic has 5 replies, 2 voices, and was last updated 5 years ago by John Moffat.
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- December 17, 2018 at 9:17 am #492086
At the start of the year Joe had an allowance of $700 against receivables . During the year of this amount $450 went bad and $ 150 was received. The balance remained unpaid at the year end. Subsequently , a further debt of $170 went bad. At the year end Joe decided to increase the allowance for receivables by $240.
what was the total irrecoverable debt expense for the year?
sir i have watched all your videos but dont get it how to solve this question? please explain..please clear my concept tooo!!December 18, 2018 at 6:34 am #492161You must have an answer to this question in the same book in which you found the question, so in future ask about whatever it is in the answer that you are not clear about – then I will explain.
The irrecoverable debts during the year are 450 + 170 = 620.
The allowance of 700 is to be increased by 240.
Therefore the total irrecoverable debts expense is 620 + 240 = 840.(I am assuming that you have copied the question completely correctly and that there is no mention of the allowance being a general allowance)
December 18, 2018 at 9:29 am #492184Sir the correct answer is $260…yes sir i have copied the correct question…i have taken this question from Kaplan Study text 1 September 2017 -31st August 2018
This is question 34… please check if the answer at the back is wrong or what coz i have written down the correct question..i cant understand the answer at the back..December 18, 2018 at 3:17 pm #492215I do not have the Kaplan Study Text – only the BPP Revision Kit.
The wording of the question is very poor.
You wrote that the allowance for receivables is to be increased BY $240. Are you sure that it does not say that it is increased TO $240?
It that is what the question did say, then the irrecoverable debts were 620 (as in my previous reply) and there is a reduction in the allowance of 460 (700 – 240), and therefore the total irrecoverable debts expense is 620 – 460 = $160.
Either way, it seems that their answer is wrong!
December 19, 2018 at 8:28 am #492299yes sir it’s written by $240..AT the year-end Joe decided to increase the allowance for receivables by $240. and as u said that their answer is wrong..coz at the back it’s coming as $260.
December 19, 2018 at 2:29 pm #492317Very strange of Kaplan 🙂
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