RECEIVABLE AND PAYABLE LEDGER

In the year ended 30 September 20X8, Fauntleroy had sales of $7,000,000. The year?end receivables amounted to 5% of annual sales. At the year end, Fauntleroy’s specific allowance for receivables equated to 4% of receivables. He also identified that this amount was 20% higher than at the previous year end. During the year irrecoverable debts amounting to $3,200 were written off and debts amounting to $450 and previously written off were recovered. What was the irrecoverable debt expense for the year? A $5,083 B $5,550 C $5,583 D $16,750 THE ANSWER(A) Year?end receivables 5% × $7,000,000 = $350,000 Year?end allowance for receivables 4% × $350,000 = $14,000 Allowance at start of year 100/120 × $14,000 = $11,667 Increase in allowance = $2,333 *Irrecoverable debts expense account* Write off of irrecoverable debts 3,200 dr Increase in allowance 2,333 dr Recovery of irrecoverable debts 450 cr Statement of profit or loss (?) 5,083 DOUBT If we had made an allowance of 14000 and the irrecoverable debts was 3200 shouldnt that 3200 be subtracted from that allowance so it shouldnt have any effect on pnl right and irrecoverable debt expense account right? should the answer be 2333(increase in allowance)-450(bad debts recovered) =1833 why is 1833 wrong?