ACCA FA2 ALLOWANCE FOR RECEIVABLES
At 1 May 2012 Ruka’s receivables allowance was $2,400. At 30 April 2013, the balance on her trade receivables account was $80,000 and she decided to write off debts of $1,600 as irrecoverable. She estimated that her receivables allowance at 30 April 2013 should be equivalent
to 2% of outstanding balances.
What amount should be charged to Ruka’s income statement for the year to 30 April 2013?
Suggested Solution.
| $ | $ | |
| Financial Position | income statement | |
| Receivables | 80,000 | |
| Irrecoverable debts | 1,600 | 1,600 |
| Receivables after Irrecoverable debts | 78,400 | |
| 2 % allowance | 1,568 | 1,568 |
| Closing receivables | 76,832 | |
| Less existing allowance | (2,400) | |
| Answer | 768 |
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