The closing trade receivables as at 31/12/2020 before bad debts written off were 64,000. The business...

   

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The closing trade receivables as at 31/12/2020 before bad debts written off were £64,000. The business has increased its allowance on trade receivables from 2% during 2019 to 4% during 2020 on closing trade receivables after bad debts written off, to reflect the worsening economic environment. No bad debts were incurred and recorded during 2019. The following two transactions have just been recorded in preparation for finalising the financial statements for the year ending 31/12/2020: No 1 2 ASSETS -8,000 (trade receivables) -1,000 (allowance for trade receivables / Allowance) EXPENSES +8,000 (bad debts written off) +1,000 (doubtful debts) 11 (Op) EQUITY REVENUES LIABILITIES Calculate the following: (a) What was the "allowance for trade receivables" balance shown on the Statement of Financial Position as at 31/12/2020? (2 marks) (b) What was the closing net trade receivable balance (i.e. after the allowance for trade receivables) shown on the business's Statement of Financial Position as at 31/12/2019? The closing trade receivables as at 31/12/2020 before bad debts written off were £64,000. The business has increased its allowance on trade receivables from 2% during 2019 to 4% during 2020 on closing trade receivables after bad debts written off, to reflect the worsening economic environment. No bad debts were incurred and recorded during 2019. The following two transactions have just been recorded in preparation for finalising the financial statements for the year ending 31/12/2020: No 1 2 ASSETS -8,000 (trade receivables) -1,000 (allowance for trade receivables / Allowance) EXPENSES +8,000 (bad debts written off) +1,000 (doubtful debts) 11 (Op) EQUITY REVENUES LIABILITIES Calculate the following: (a) What was the "allowance for trade receivables" balance shown on the Statement of Financial Position as at 31/12/2020? (2 marks) (b) What was the closing net trade receivable balance (i.e. after the allowance for trade receivables) shown on the business's Statement of Financial Position as at 31/12/2019?

Answer rating: 100% (QA)

a Computation of allowance for trade receivables to be shown as of 31122020 ... View the full answer