At 30 June X5 a company's allowance for receivables was $90,000. At 30 June X6 trade receivables totalled $703,500. It was decided to write off debts totalling $90,000 and to adjust the allowance for receivables to the equivalent of 5 percent of the trade receivables based on past events.A sum of $6,000 was recovered from debts previously written off.
What figure should appear in the income statement and financial position for the year ended 30 June X6 for these items?
Suggested solutions:
| $ | |
| Receivables at year end | 703,500 |
| Specific write off | 90,000 |
| 613,500 | |
| 5 % general provision | 30,675 |
| Net Receivables at year end in Financial Position | 582,825 |
| $ | |
| Specific write off | 90,000 |
| 5% general provision | 30,675 |
| Less bad debt recovered | 6,000 |
| Less allowance for receivables opening balance | 90,000 |
| Irrecoverable debts expense n Financial Statement | 24,675 |
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