Dear Mr. John,
At Jan 20*1 there was an allowances for receivable of $ 3000, During the year$ 1000 of debts were written as irrecoverable & $ 800 of debts previously written off were recovered.At 31 december 20*1 it was decided to adjust the allowances to 5% of receivable which are $ 20000/-
As per the solution (15% of 20000) has been calculated and instead =(20000-1000)%15
As per the question FIA-FFA Financial Accounting revision kit 2019
Chapter Receivable & payable Q -11:11
Need your advice
Regards Victor
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6y ago#1The reason is that the question says that the $1,000 was written off during the year, and therefore $20,000 at the end of the year is already after removing the $1,000.
If the question said that it was decided at the end of the year to write of $1,000, then you would have subtracted $1,000 before calculating the allowance.
Mr. John ,
The question says ..
Adjust the allowances for receivable to 5% of receivable which are $20000/- but answer taken 15%
Need advice
Regards
Victor
6y ago#3Although the answer does say 15%, it is a typing error and if you check you will see that they have correctly calculated 5% of 20,000 which is 1,000.
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