Reference no: EM132708557
Question - Accounting for Irrecoverable Debts
A. At 1 January 20X1, there was an allowance for receivables of $3,000. During the year, $1,000 of debts were written off as irrecoverable, and $800 of debts previously written off were recovered. At 31 December 20X1, it was decided to adjust the allowance for receivables to 5% of receivables which are $20,000. What figure should be included in the statement of profit or loss as the receivables expense for the year?
B. At 31 December 20X4 a company's trade receivables totalled $864,000 and the allowance for receivables was $48,000. It was decided that debts totalling $13,000 were to be written off. The allowance for receivables was to be adjusted to the equivalent of five per cent of the receivables. What figures should appear in the statement of financial position for trade receivables (after deducting the allowance) and in the statement of profit or loss for receivables expense?
C. At 30 September 20X2 a company's allowance for receivables amounted to $38,000, which was equivalent to five per cent of the receivables at that date. At 30 September 20X3 receivables totalled $868,500. It was decided to write off $28,500 of debts as irrecoverable. The allowance for receivables required was to be the equivalent of five per cent of receivables. What should be the charge in the statement of profit or loss for the year ended 30 September 20X3 for receivables expense?
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