- 5 Marks
FA – L1 – Q30 – Bad and doubtful debt
Question
The financial records of Kojo Mensah include an allowance for receivables of GH¢206,000 brought forward on 1 January. Trade receivables at 31 December amount to GH¢2,440,000 and irrecoverable debts to be written off total GH¢55,000. An allowance for receivables of 5% of receivables is to be carried forward.
Required:
Write up the irrecoverable debts expense account and the allowance for receivables account.
Answer
Irrecoverable debts expense account
| Date | Details | GH¢ | Date | Details | GH¢ |
|---|---|---|---|---|---|
| 31/12 | Receivables (write-offs) | 55,000 | 31/12 | Statement of P or L | 66,000 |
| 31/12 | Allowance for receivables | 11,000 | |||
| 66,000 | 66,000 |
Allowance for receivables account
| Date | Details | GH¢ | Date | Details | GH¢ |
|---|---|---|---|---|---|
| 31/12 | Receivables (write-offs) | 55,000 | 01/01 | Balance b/d | 206,000 |
| 31/12 | Balance c/d | 122,000 | 31/12 | Irrecoverable debts expense | 11,000 |
| (increase in allowance) | |||||
| 177,000 | 177,000 | ||||
| 01/01 | Balance b/d | 122,000 |
- Topic: Bad and doubtful debt
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