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Sir i have doubt as to how solve the following question
At the end of 20×7,Chester’s receivables balance is 230000.He wishes to make specific allowance for Emily’s debt of 450 and Lulu’s debt of 980.Irrecoverable debts of 11429 should be written off.
What amount should be charged or credited to the statement of profit and loss in respect of irrecoverable debt and the allowance for receivables if the allowance at the start of the year was 11700?Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and workings.
I explain how to solve this sort of question in detail in my free lectures on irrecoverable and doubtful debts – please do not expect my to type out my lectures again here 🙂
Sir i have the solution but i am not able to understand it.
It is from kaplan exam kit
I guess there is some error in question
Kindly provide me your perspective sir
Sir please that’s the only doubtful question i have in receivables
Kindly provide me with your solutionHave you watched the lectures??
The specific allowance required at the end of the year is 450 + 980 = 1430. There is no mention of a general allowance (which is very unusual for an exam type question)
The allowance brought forward is 11,700, and therefore there is a reduction in the allowance of 11,700 – 1430 = 10,270.
Therefore there is a charge in the SOPL of 11,429 – 10,270 = 1,159
Yes sir i have watches
I had the doubt that if nothing is given of general allowance at the year end shouldn’t we just carry forward the 11700 allowance??
No. They might decide to increase the general allowance or to decrease it, depending on the state of the economy etc.. You cannot ever simply assume that the same amount is carried forward.
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