Receivables control ledger

Q.Pillay’s receivables ledger at 1July 2012 showed a total of$61,250. During the year ended 30 June 2013, the sales daybook total amounted to$549,600 and the total customer receipts column in the cash book amounted to $499,800. At the year end it was decided that $4,370 was to be written off and a general allowance of 5% of receivables should be created. What was the balance on Pillay’s receivables ledger at 30 June
2013?

a) $7,080

b) $101,346

c) $106,680

d) $115,420

This question was asked in my model exams but I did not attend this question because I thought that I would attempt this question in the last minute but I didn’t get enough time. Also, when the results came, they just simply showed that the answer is wrong, but did not provide me the right answer.

So, I have decided to find the right answer, but Iam fixated on whether to include the allowance for receivables or not. If we don’t include the allowance, we get c) $106680 ( $61250 + $549600 – $499800 – $4370). But if we do include it, then we get b) $101346 (106680 – 5%).

Please explain whether we need to account for allowance for receivables or not.

Thanks in advance ??