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Receivables

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Receivables

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • November 14, 2015 at 11:38 am #282297
    aijaz
    Member
    • Topics: 4
    • Replies: 0
    • ☆

    aijaz

    Participant

    Topics: 3Replies: 0

    At 30 Jun 05, a company’s allowance for receivables was $39000.
    At 30 Jun 06, trade receivables totalled $517000 & it was decided to write off debts totaling $37000 as irrecoverable.
    It was also decided to adjust the allowance for receivables to 5% of the remaining trade receivables. What allowance for receivables should appear in the SOFP at 30 Jun 06? Ans: $ 15000

    I have solved as below but my answer is not tallying:

    Cr Allowance for receivables 39000
    Dr Receivables 517000
    Cr Receivables 37000
    Dr Irrecoverable & Doubt Debts expense 37000
    General Allowance (5% of 480000): 24000
    Dr Allowance for receivables 15000
    Cr Irrecoverable & Doubt Debts expense 15000
    Balance c/f on Allowance for Receivables 24000 which appears on SOFP on 30 Jun 06

    November 14, 2015 at 2:04 pm #282324
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    You have either typed the question incorrectly (or the answer) or there is a mistake in the book you are using. The correct answer to what you have typed is certainly not $15,000 !!

    The allowance for receivables as 30 June 2006 = 5% x (517,000 – 37,000) = $24,000.

    (This does mean reducing the existing allowance by $15,000, but that is not what the question is asking for)

    Why are you doing all those debits and credits? They are not needed (and you certainly will not have time for them in the exam!!!). There is very little testing of debits and credits in Paper F3, and you will never be actually required to produce a t-account.

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