Quiz Part 3 (FA1)

Which TWO of the following are credit entries in the trade receivables ledger account?

• Cash paid to credit suppliers

• Discounts received

• Irrecoverable debts

• Sales returns from credit customers

Anjali is reviewing his receivables balances at the year ended 30 September 20X8. He has established that an allowance equivalent to 6% of the outstanding balance on receivables is required at 30 September 20X8. The following information is also available: Receivables at 30 September 20X8 $318,000 Irrecoverable debt to be written off $7,400 Allowance for receivables 1 October 20X7 $25,600 What is the figure for Anjali's irrecoverable debt expense that should be recognised in the statement of profit or loss the year ended 30 September 20X8?

• $436

• $7,400

• $14,364

• $26,036

On 1 January 20X8 Wu had an allowance for receivables of $4,800. During the year, he has written off an irrecoverable debt of $900 and recovered a previously written off debt of $600. The remaining receivables balance at 31 December 20X8 is $204,000. The allowance for receivables at 31 December 20X8 is equivalent to 3% of receivables.

What is Wu's irrecoverable debt expense for the year ended 31 December 20X8?

Carrie's trial balance at 31 March 20X4 included a total on her receivables account of $67,500 and a brought forward figure on her allowance for receivables account of $1,220.

You have obtained the following information:

Carrie received a cheque from Drake immediately before the year-end. Drake's debt of $500 had been written off in full during the year.

At 31 March 20X4, there were balances of $2,000 that should be written off.

The allowance for receivables at 31 March 20X4 should be 2% of remaining receivables.

What figure should Carrie show in her statement of financial position for receivables at 31 March 20X4?

• $65,500

• $64,190

• $65,000

• $64,690

Clarke had a draft total on his receivables ledger account at 31 July 20X2 of $23,440.

When finalizing the accounts, Clarke decided to write off a debt of $500. He also decided that the allowance for doubtful debts had to be increased from $900 at the start of the period to $1,200 at 31 July 20X2.

What figure will Clarke show for receivables in his statement of financial position at 31 July 20X2?

• $21,740

• $22,240

• $22,640

• $22,940

At 1 July 20X7 the receivables allowance of Laura's business was $88,000. During the year ended 30 June 20X8 debts totalling $24,000 were written off. Laura has decided that the receivables allowance as at 30 June 20X8 will be $86,000.

What amount should Laura's business report as their receivables expense in their statement of profit or loss for the year ended June 30 20X8?

At the end of their financial year, 30 April 20X4, a business had a balance on their receivables ledger control account of $98,500.

At the start of the financial year the business had an allowance for receivables of $12,000.

The allowance for receivables required at 30 April 20X4 is 100% of a debt of $5,500 and 2% against a further $60,000.

What effect on profit will posting the adjustments required to update the allowance for receivables have?

• Decrease $5,300

• Decrease $7,700

• Increase $5,300

• Increase $7,700

When the trial balance is being prepared, into which column should the balance of an allowance for receivables be entered?

• SOFP Debit

• SOFP Credit

• SOPL Debit

• SOPL Credit

Jing has the following balances in his trial balance at 28 February 20X8

Trade Receivables $78,000

Allowance for receivables at 1 March 20X7 $4,800

Irrecoverable debts written off $80

Jing has estimated that an allowance for receivables should be made that is equivalent to 2% of outstanding Trade receivables.

Which of the following combinations represents the impact on the financial statements of the necessary adjustments for receivables?

• Increase in Trade receivables, increase in profit for the year and an increase in the allowance.

• Decrease in Trade receivables, increase in profit for the year and an increase in the allowance.

• Decrease in Trade receivables, decrease in profit for the year and a decrease in the allowance.

• Decrease in Trade receivables, decrease in profit for the year and an increase in the allowance.

On 24 February 20X7, Binta received $400 from a customer whose debt had been written off in the year ended 31 December 20X5. The amount is correctly recorded as a debit to the bank account.

What is the credit entry to record this receipt?

• Trade receivable

• Allowance for receivable

• Irrecoverable debts expense

• Revenue