A Accounting

Receivables Charge to statement of profit or loss (video below)

At 30 June 20X6 a company’s allowance for receivables was $9,750. At 30 June 20X7 trade receivables totaled $129,250. It was decided to write off debts totaling $9,250. The allowance for receivables was to be adjusted to the equivalent of 7 per cent of the trade receivables.

What figure should appear in the statement of profit or loss for these items?

Answer

$
Allowance for receivables ((129,250 – 9,250) x 7%) 8,400
Previous allowance (9,750)
Reduction (1,350)
Debts written off 9,250
Charge to statement of profit or loss 7,900


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