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In the statement of financial position at 31 December 20X5, Boris reported net receivables of $12,000. During 20X6 he made sales on credit of $125,000 and received cash from credit customers amounting to $115,500. At 31 December 20X6, Boris wished to write off debts of $7,100 and increase the allowance or receivables by $950 to $2,100.
What is the net receivables figure to include in the statement of financial position at 31 December 20X6?My answer is 13250 whereas book gave answer of 13450. Please help me sir.
The allowance at the start of the year was 2,100 – 950 = 1,150
Therefore the balance on receivables at the start of the year was 12,000 + 1,150 = 13,150.
The balance on receivables at the end of the year = 13,150 + 125,000 – 115,500 – 7,100 = 15,550
The balance on the allowance at the end of the year is 2,100.Therefore the net receivables are 15,550 – 2,100 = 13,450
Sir I did all same, but the opening allowance I kept was 950.
Sir why are we writing opening allowance as 1150 as it is saying that we have decided to increase from 950 to 2100 so why we won’t consider 950 as opening allowance?The question does not say that the allowance increased from 950. It says that the allowance was increased by 950, which means it was 950 lower at the start of the year.
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