Irrecoverable Debts and Allowance for Receivables Questions PDF

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Irrecoverable Debts and Allowance for Receivables

1. At 31 December 20X2 a company’s receivables totalled £400,000 and an allowance for receivables of £50,000 had been brought forward from the year ended 31 December 20X1. It was decided to write off debts totalling £38,000 and to adjust the allowance for receivables to 10% of the receivables. What charge for receivables expense should appear in the company’s statement of profit and loss for the year ended 31 December 20X2? A. B. C. D.

£74,200 £51,800 £28,000 £24,200

2. At 1 July 20X2 the receivables allowance of Q was £18,000. During the year ended 30 June 20X3 debts totalling £14,600 were written off. It was decided that the receivables allowance should be £16,000 as at 30 June 20X3. What amount should appear in Q’s statement of profit or loss for receivables expense for the year ended 30 June 20X3? A. B. C. D.

£12,600 £16,600 £48,600 £30,600

3. At 30 September 20X2 a company’s allowance for receivables amounted to £38,000, which was 5% of the receivables at that date. At 30 September 20X3 receivables totalled £868,500. It was decided to write off £28,500 of debts as irrecoverable and to keep the allowance for receivables at 5% of receivables. What should be the charge in the statement of profit or loss for the year ended 30 September 20X3 for receivables expense?

A. B. C. D.

£42,000 £33,925 £70,500 £32,500

4. A company has received cash for a debt that was previously written off. Which of the following is the correct double entry to record the cash received? Debit A. B. C. D.

Irrecoverable debts expense Cash Allowance for receivables Cash

Credit Accounts receivable Irrecoverable debts expense Accounts receivable Allowance for receivables

5. At 31 December 20X4 a company’s trade receivables totalled £864,000 and the allowance for receivables was £48,000. It was decided that debts totalling £13,000 were to be written off, and the allowance for receivables adjusted to 5% of the receivables. What figures should appear in the statement of financial position for trade receivables (after deducting the allowance) and in the statement of profit or loss for receivables expense? Statement of profit or loss A. B. C. D.

£8,200 £7,550 £18,450 £55,550

Statement of financial position £807,800 £808,450 £808,450 £808,450...