1.rafe & Co have total accounts receivable at the end of their accounting period of $45,000. Of these it is discovered that one, Mr Xiun who owes $790, has been declared bankrupt, and another who gave his name as Mr Jones has totally disappeared owing Araf & Co $1,240.
Calculate the effect in the financial statements of writing off these debts as irrecoverable.
A
B
2.Celia Jones had receivables of $3,655 at 31 December 20X7. At that date she wrote off a debt from Lenny Smith of $699. During the year to 31 December 20X8 Celia made credit sales of $17,832 and received cash from her customers totalling $16,936. She also received the $699 from Lenny Smith that had already been written off in 20X7.
What is the final balance on the receivables account at 31 December 20X7 and 20X8?
A
B
3.John Stamp has opening balances at 1 January 20X6 on his trade receivables account and allowance for receivables account of $68,000 and $3,400 respectively. During the year to 31 December 20X6 John Stamp makes credit sales of $354,000 and receives cash from his receivables of $340,000.
At 31 December 20X6 John Stamp reviews his receivables listing and acknowledges that he is unlikely ever to receive debts totalling $2,000. These are to be written off as irrecoverable. Past experience indicates that John should also make an allowance equivalent to 5% of his remaining receivables after writing off the irrecoverable debts.
What is the amount charged to John’s income statement for irrecoverable debt expense in the year ended 31 December 20X6?
A $2,700
B $6,100
C $2,600
D $6,000
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