Ch 10 Trade Receivable (Impairment loss on TR)

Define allowance for impairment on trade receivables.

• It represents the amount owed by credit customer.

• It represents the amount owed by a credit customer which are unlikely to be collectible.

• It represents the amount owed by a credit customer which are likely to pay up.

• It represents the amount owed by a credit customer who has gone bankrupt.

State the double entry when an allowance for impairment of trade receivables of $500 is made in the first year of business.

• Dr Trade receivables

  Cr Cash at bank

• Dr Impairment loss on trade receivables

  Cr Trade receivables

• Dr Impairment loss on trade receivables

  Cr Allowance for impairment of trade receivables

• Dr Trade receivables

  Cr Allowance for impairment of trade receivables

Bonjour Trading had a balance of $4 400 in his trade receivables (TR) account on 31 Dec 2020. The business provides an allowance for impairment of trade receivables based on 10% of the TR balance. Calculate the impairment loss on trade receivables for 31 Dec 2020.

• $440

• $3960

• $4400

• $4840

On 1 January 2020, Johnny had a balance of $3200 in his allowance for impairment of trade receivables.

On 31 December 2020, he had a balance of $5200 in his allowance for impairment of trade receivables.

What is the impairment loss on trade receivables for the year ended 31 December 2020?

• $2000

• $3200

• $8400

• $5200

Refer to the question above.

• $140

• $1000

• $210

• $70

Refer to the question above.

• 960

• 240