A business has an accounting year ending on 31 July. It sells goods on credit and on 31 July 20X9 had trade receivables of £15,680. This includes debts of £410 due from A. Wall and £270 from B.
Wood, both of which were regarded as irrecoverable.
The business has decided to create an allowance for irrecoverable debts at 31 July 20X9 of 4 per cent of trade receivables. Previously there was no allowance for irrecoverable debts.
You are required to show the ledger entries in respect of the above irrecoverable debts and allowance for irrecoverable debts.