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gn john moffat
I am looking at the updated pilot questions. Question 2 of Section B
Need a little explanation as to why 10 is subtracted under Admin.exp.
ie (325+10 (W4) + 16 (W3)-10))
I don’t know whose workings you have copied, but although the final answer is correct their workings are a bit odd 🙂
The allowance is currently 10 and is to be increased to 5% of receivables i.e. to 16 (5% x 320).
So the cost of increasing it is 16 – 10 = 6.
So the total admin cost is 325 (from the trial balance) + 6 = 331
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