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The following extract of Jim’s Trial Balance as at 31 December 2007
Receivables Dr 29600
Allowance for Receivables CR 3100
Irrecoverable Debts 1600dr
following notes are provided
a) Additional irrecoverable debts of 3000 were discovered at the year end.
b) It has been decided to make an allowance for receivables of 10% on the adjusted receivables at the year end.Find the total irrecoverable debts expenses(irrecoverable debts and allowances for receivables) for the year ended 31 December 2007 and the closing net receivables balance as at 31 december 2007.
help me how to calculate this question please…
You should really watch the free lecture on irrecoverable and doubtful debts.
You need to calculate the allowance required at the end of the year (10% x (29600 – 3000))
The expense for the year will be the irrecoverable debts (4600) less the decrease in the allowance (from 3100 to the figure calculate in the previous line).
To calculate receivables why we subtracted 3000 from 29600 not 4600 as there were already 1600 irrecoverable debt
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