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the sales revenue in a company was $200000 and its accounts receivable were 5% of turnover. the company wishes to have an allowance for receivables of 4% of receivables which would make allowance one third higher than current allowance how the profit affected by change in allowance will be calculated when we don’t know how to calculate turnover?
Please do not ask the same question 3 times!! I have deleted your other two posts of this question.
We do know the turnover – it is the sales revenue which is $200,000.
Therefore the receivables at 5% x $20,000 = £10,000 and so the allowance is 4% x 10,000 = $400.
This is 1/3 higher than the current allowance, and so the current allowance is $300 and the change in the allowance is $100.
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