ACCA F3 MOCK EXAM RECEIVABLE
At 30 June 2005 a company’s allowance for receivables was $5,000. At 30 June 2006 trade receivables totalled $400,000.
It was decided to write off debts totalling $3,000 and to adjust the allowance for receivables to the equivalent of 5 per cent of the trade receivables based on past events.
What figure should appear in the income statement for the year ended 30 June 2006 for these items?
| Trade receivables | 400,000 | |
| Less Write Off | 3,000 | 3,000 |
| 397,000 | ||
| 5% New Allowance | 19,850 | 19,850 |
| Year End Receivables in Financial Position | 377,150 | |
| Less opening balance allowance for receivables | (5,000) | |
| Irrecoverable expenses in Income statement | 17,850 |