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Hi sir, eg allowance for received b/d $850. 31dec20x8 allowance for receivable $1000a bad debts $500 written off during the year and previously $100 included in a allowance for receivable .wat should be the amount in income statement ?
I dun understand y $150+$500 & not $150+$400
In future you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other.
I am not sure that you have typed the question in full, but I assume that the 500 irrecoverable debts (we stopped using the word bad debts many years ago!) includes 100 that had previously been allowed for.
In this case the total expense is the expense of the total irrecoverable debts (500) plus the increase in the allowance (1000 – 850), so a total of 650.
(If you prefer you can take the new irrecoverable debts of 400, and say that the irrecoverable debt of 150 reduced the brought forward allowance to 750, and so the cost of increasing the allowance is 1000 – 750 = 250. So again the total expense is 400 + 250 = 650. However this way of doing it is messier – the first way is preferable).
It will help you to watch our free lectures on this.
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