Receivables and irrecoverable debts 31 mins 8.1 AL30 April 20X7 the total amount owed to James by his customers was $54,864. At the same date, James calculated that his recevables allowance is $3,775. How should these balances be reported in James’ statement of financial position as at 30 April 20X77 A $51,089 as 2 current asset B $51,089 as current lability $54,864 as a curent asset and $3,776 as a current ibility D $54,864 as a cument liability, and $3,776 asa cutrant asset (2 marks) ‘The following information relates to questions 8.2 and 8.3 ‘The total amount owed to Robert by his customers at 30 November 20X7 was $78,600. Robert has decided ‘that a balance of $600 should be written off as it is inecoverable, and determines that an allowance equal to 11,8 ofthe remaining receivables balance should be mado. His receivables allowance at 1 Decembor 20X6 was $1,200, '8.2 Robert has made the entry in the recaivabies expense account to write off the inecoverable balance, ‘What other entry dows he need! to make? A debit entry inthe sales account A credit entry inthe sales account [A debit entry inthe receivables account A credit entry in the receivables account (2 marks) voas ‘8.3 How should the movement in the receivables allowance be reflected in the statement of profit or loss? A Acre of $21 B Acharge of $21 Acted of $30 D Achatge of $30 (2 marks) 8.4 Leung makes an allowance for receivables on the basis ofthe length of time the debt has been outstanding. The analysis of recewvables' balances at 30 May 20X2, and the related allowance is: Length of time debt has been outstanding Allowance required Balances at 30.11.X1 $ Less than 30 days Nil 70,866 30 days to 69 days 110% of balances 28,260 {60 days and over 50% of balances 10,808 What should the allowance for receivables be? A $2,525 B $6,404 c $7,929 D $10,808 (2 marks)85 Colin allows for potential irecoverable debts on the basis of the length of time the debt has been ‘outstanding. The aged receivables analysis at 30 September 20%3 and the allowances required ate Age of debt 3 Allowance requited 0-20 days, 56,800 1% of balances 31-59 days 37,700 20% of balances 60 days and over 14,300 75% of balances ‘At 1 October 20X2, Colin's allowance for receivables was $18,765. ‘Which of the following should be reported in Colins statement of profit or loss for the year to 30 September 20x37 A Acharge of S518 8 Acredit of $518 CA charge of $19,283 D — Acraditot $19,283 (2 marks) 86 At 30 November 20X6 the balance on Claire's receivables ledger is $37,890. Clare has deciced to write off balances totaling $1,570. She has also calculated that an allowence equivalent to 2.5% of the remaining balances is required ‘What value of recelvables should be reported in Claire's statement of financial position at 30 November 20X62 A $36,642 B $36,412 c $36,400 D $37,142 (2 marks) 8.7 What general ledger entries are required to write off an iecoverable balance dus from a customer? A Debit Sales Credit Receivables expense B Debit Receivables expanse Credit Sales Debit Receivables expense Credit Trade receivables contral D Debit Trade receivables control Credit. Receivables expense: (2 marks) 88 Shirly wishes to wit of an imecoverable receivables balance. She has made the corect entry in tho receivables expense accourt What entry is needed to complete the double entry? A Debit receivables B Credit receivables C Debit receivables allowance D Credit receivables allowance (2 marks)8.9 In September 20X1, Dora wte off an ammount of $120 due from a customer wi had become bankrupt. However, n January 20X2, she unexpectadly received haf ofthe amount due from that ‘customer. Dora prepares her accounts to 31 December ezch year How should Dora account for this amount? A ‘As an accrual for $60 Bs sundry income of $60 inthe statement of profit or loss CAs new receivable of $60 D ‘AS a prepayment of $60 (2 marks) 18.10 In the year to 31 December 2041, Tracy wrote off an amount of $275 due from a customer who hag ‘become bankrupt. She also makes an allowane» of 3% ofthe total recsivables balance atthe year end. Receivables at 31 December 20X1 were $12,000. The previous years allowance was for $400. What amount should be written off tothe statement of profit of loss for the year to 31 December 20x1? A $360 B $635 c $315 D $235 (2 marks) 8.11 At31 December 20X2 a companys receivables totalled $400,000 and an allowance for recsivables of ‘$50,000 had been brought forward from the year ended 31 December 20X1. It was decided to write off debts totaling $28,000 and to adjust the allowance for receivables t9 10% of the receivables. What charge for racelvables axpense should appear In the company's statement of profit ot loss for the yeat ended 31 December 20X27 A $74,200 B $51,800 c $28/000 D $24,200 (2 marks) 8.12 AL July 20X3 a limited ability company had an allowance for receivables of $83,000. During the year ended 30 June 20X4 debts totaling $145,000 were written off At 30 June 20KA it was determined that a receivables allowance of $218,000 was required. What figure should appear in the company's statement of profit or loss for the year ended 30 June 20XA for receivables expanse? ‘A $185,000 B $364,000 © $281,000 D $11,000 (2 marks) 8.13 Acompany has received cash for a debt that was previously writen off Which ofthe following isthe correct double entry to record the cash received? Debit credit A recoverable debts expense Accounts receivable B Cash ‘Sundry income ~ recoverable debis recovered Allowance for receivables Accounts receivable D Cash Allowance for receivables (2 marks) (Total = 26 marks)