ACCA F3 IRRECOVERABLE EXPENSE

On 31 March 2014, the balance on the receivables control account of P Company is $250,000. The bookkeeper has identified that the following adjustments for receivables are required:

Irrecoverable debt recovered $7,000
Specific allowance $8,000

It was decided that a further allowance for receivables of 8% should be made based on past events. The allowance for receivables on 1 April 2013 was $10,000.

What was the receivables expense for the year ended 31 March 2014?

SUGGESTED SOLUTIONS

$ $
Trade receivables 250,000
Less Write Off 8,000 8,000
242,000
8% New Allowance 19,360 19,360
Year End Receivables in Financial Position 222,640
Less opening balance allowance for receivables (10,000)
Less Irrecoverable debt recovered (7,000)
Irrecoverable expenses in Income statement 10,360

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