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1 What are the accounting entries normally recorded in the receivables general ledger account?
1.2
2 What is the double-entry to write off an irrecoverable debt?
2.1
3 How is a receipt in respect of a previously written off debt treated?
3.2
4 What is a doubtful debt?
4.1
5 What is a contra?
5.1
6 What is a statement of account?
6.2
7 Explain what an aged analysis of receivables and explain what it is used for.
6.3
1 During the year, C Arthy wrote off $1,400 of trade receivables as irrecoverable. At the end of the year, it was decided to reduce the allowance for receivables' from $3,000 to $2,700. What is the total statement of profit or loss charge in respect of irrecoverable debts?
A $300
B $1,100
C $1,400
D $1,700
2 At 1 January, H Ellen had a balance on the allowance for receivables' account of $7,900. During the year, irrecoverable debts of $3,600 were written off. At the end of the year, it was decided to increase the allowance for receivables' by $1,500. What accounting entries are needed to increase the allowance?
A Debit Irrecoverable debts $1,500, Credit Allowance for receivables $1,500
B Debit Irrecoverable debts $5,100, Credit Allowance for receivables $5,100
C Debit Allowance for receivables $1,500, Credit Irrecoverable debts $1,500
D Debit Allowance for receivables $5,100, Credit Irrecoverable debts $5,100
For suggested answers, see the 'Answers' section at the end of the book.
NEED FOR AN ALLOWANCE
Explain the difference between the irrecoverable debts account and the allowance for receivables account.
For suggested answers, see the 'Answers' section at the end of the book.
R BENNETT
R Bennett is reviewing the trade receivables balances at the year end 30 June 20X4, which total $18,793 before reflecting the following:
(a) Irrecoverable debts of $371 are to be written off.
(b) $120 has been received in respect of a debt which was written off in the previous year. No more money is expected to be received from this customer.
(c) The allowance for receivables' at 1 July 20X3 comprised:
Specific allowances
R Abra ...................... $171
F Jinx ...................... $130
...................................... $301
The allowance against R Abra's debt is no longer required as the debt is included in the $371 irrecoverable debts to be written off in the period. The allowance against F Jinxs' debt is to remain, and an allowance is required in respect of the debt of E Waters which stands at $620.
Required:
(1) Open up a trade receivables general ledger account and an irrecoverable debts expense account and record the transactions in (a) and (b) above.
(2) Calculate the allowance for receivables required at 30 June 20X4.
(3) Open up an allowance for receivables account and record the allowance at 30 June 20X4.
For suggested answers, see the 'Answers' section at the end of the book.
RECEIVABLES: CHAPTER 10