On 31 December 2019, a company's receivables totalled £400,000 and allowance for receivables of £50,000 had been brought forward for the 1 December 2019. It was decided to write off debts totalling £38,000. The allowance for receivables was to be adjusted to the equivalent of 10% of the receivables as at 31 December 2019 What charge for receivables expenses should appear in the company’s statement of profit and loss for the year ended 31 December 2019?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
On 31 December 2019, a company's receivables totalled £400,000 and allowance for receivables of £50,000 had been brought forward for the 1 December 2019. It was decided to write off debts totalling £38,000. The allowance for receivables was to be adjusted to the equivalent of 10% of the receivables as at 31 December 2019
What charge for receivables expenses should appear in the company’s statement of
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