You are setting up annual accounts for the company DEF ehf. for the financial year ended 31 December 2020. In last year's annual accounts, ie. financial year 2019, trade receivables totaled ISK 633,697,712. and the table below for the age analysis of trade receivables is taken from the notes that accompanied the annual accounts for the financial year ended 31 December 2019.

The following information is available on the company's operations in the year 2020: The company's total sales were ISK 4,727,485,925. and was mostly in account transactions. Sales in cash amounted to a total of ISK 354,561,444. The company received a total of ISK 4,243,256,296 from customers. The expense in the income statement due to verifiably lost trade receivables in the year 2020 was ISK 7,575,500. during the year. The key "Accounts receivable" in the balance sheet was offset.

The following information is available on the age analysis of trade receivables at the end of 2020: The maturity, within 30 days ISK 81,113,130, 31 - 60 days ISK 40,540,710, 61 - 90 days ISK 20,213,130. and older than 91 days ISK 6,825,210.

During the settlement of the year 2020, which was in March 2021, it was revealed that two of the company's customers had been declared bankrupt, Customer A went bankrupt in December 2020 and owes ISK 6,525,325. and customer B went bankrupt in February 2021 and owes ISK 8,838,582. No amount was charged in 2020 due to these two bankruptcies and the claims were not due at the end of the year.

The following needs to be resolved;

a. Set up a table for explanations in the 2020 annual accounts that shows the age analysis of trade receivables at the end of 2020. Use the same proportional write-down in 2019, except that the "Non-Expense" must be increased from 1.50% to 1.75%.
b. Show what entries need to be made in the company's accounting in the year 2020. Make sure to show the correct date, the names of the relevant accounting keys and all figures in whole ISK. Entries can be displayed as T-accounts if you prefer.
c. What is the total charge for the year 2020 in the income statement due to trade receivables and what is the amount of trade receivables in the balance sheet.

				Nominal value	Proportional	Write-down
	Age analysis of trade receivables 31.12.2019			trade receivables	write-down	in ISK
	The charge			513.537.000	1,50%	7.703.055
	Due date: within 30 days			77.250.600	3,50%	2.703.771
	Due date: 31 - 60 days			38.610.200	8,00%	3.088.816
	Due date: 61 - 90 days			19.250.600	16,00%	3.080.096
	Due date: older than 91 days			6.500.200	75,00%	4.875.150

Answer rating: 100% (QA)

Age analysis of trade receivables 31122019 The charge Due date within 30 days Due date 31 60 days Du... View the full answer