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Dear All,
The question states as per below,
“When preparing the financial statements for the recent year end, the accountant noticed that Arwight has not paid an invoice for several million dollars and it is significantly overdue for payment. It appears that the entity has liquidity problem and it is unlikely that Arwight will pay. the accountant believes that a loss allowance for trade receivables is required.”
why is a loss allowance for trade receivables required when there is an overdue payment? Shouldn’t it be allowance in account payable . The amount due is a payment not a receivables
I assume that Arwight is the customer. So A is a receivable.
Therefore loss allowance would be recognised for total expected loss.
Come back if not clear.
PLEASE SHOW TOPIC (E G BAD DEBTS) AND NOT THE QUESTION NAME AS THREAD HEADER ON FUTURE QUESTIONS
🙂
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