Mirchawala’s Hub of Accountancy:

FA2: Maintaining Financial Records:

Receivables and irrecoverable debts:
Question#1:
Ethel's trial balance includes the following balances:
$
Trade receivables 136,853 Dr
Receivables allowances 14,862 Cr
If Ethel calculates that her receivables allowance should be revised to $13,854 what should be
reported for the receivables expense in her statement of profit or loss?
A. A charge of $1,008
B. A credit of $13,854
C. A credit of $1,008
D. A charge of $13,854
Question#2:
At 1 May 20X8, the total balance on Trevor’s receivables ledger was $88,463. This includes a balance of
$563 which is irrecoverable.
Which TWO of the following from the journal entry that is needed to write of the irrecoverable
balance?
A. Credit: Receivables
B. Debit: Receivables expense
C. Credit: Receivables expense
D. Debit: Receivables
Question#3:
At 1 May 20X8 Trevor’s receivables allowance was $1,468 At 30 April 20X9 the total balance on his
receivables ledger was $88,463. This includes a balance of $563 which is irrecoverable. Trevor estimates
that his receivables allowance at 30 April 20X9 should be equivalent to 2% of the remaining balances.
How should the movement in the receivables allowance be reported in the statement of profit or
loss?
A. A charge of $290
B. A credit of $290
C. A charge of $1,758
D. A credit of $1,758
Question#4:
Kuldip has written off a customer’s outstanding balance in his accounts for the year ended 30
September 20X1. However, the customer paid the full amount of the outstanding balance of $277 in
December 20X1.
How should Kuldip account for the payment made by the customer?
A. Credit the receivables expense account in the statement of profit or loss
B. Create an accrual in the statement of financial position
C. Treat it as sundry income in the statement of profit or loss
D. Create a provision for the amount received

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Question#5:
Minnie calculated that her receivables allowance at 30 April 20X7 should be $890. At 30 April 20X6, her
receivables allowance was $770.
How should the movement in the receivables allowance be recorded in Minnie's statement of profit
or loss?
A. A charge of $890
B. A credit of $890
C. A charge of $120
D. A credit of $120
Question#6:
At 30 November, Charles is owed a total of $72,660 by his customers. His receivables allowance brought
forward from the previous year end is $11,700. He estimates that his receivables allowance should be
equivalent to 15% of the amounts due from customers.
What value should be included in the statement of profit or loss for receivables expense for the year
to 30 November?
A. $801 debit
B. $10,899 debit
C. $801 credit
D. $10,899 credit
Question#7:
Jessie’s trial balance at 30 September 20X0 included:
Debit Credit
$ $
Receivables ledger control account 90,350
Allowance for doubtful debts brought forward 2,490
The following information is also available:
(i) No entries have been made in respect of cash of $1,320 received from Jeffrey whose balance
had been written off last year, and
(ii) At 30 September 20X0 an irrecoverable balance of $1,950 is to be written off and the debtors
allowance is to be adjusted to 1·5% of the remaining balance
What figure will be reported in the statement of financial position at 30 September for receivables?
A. $89,564
B. $85,754
C. $87,074
D. $88,994
Question#8:
What journal entry is needed to write off an irrecoverable receivables balance?
A. Debit Receivables Credit Receivables expense
B. Debit Receivables expense Credit Receivables
C. Debit Receivables allowance Credit Receivables expense
D. Debit Receivables expense Credit Receivables allowance
Question#9:
If Kate receives $258 for a debt which was written off in a previous year, how will her financial
statements for that year be affected by the receipt?
A. Her receivables balance will be reduced by $258
B. Her receivables balance will be increased by $258
C. Her profit will be reduced by $258
D. Her profit will be increased by $258

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Question#10:
Jerome’s receivables ledger has balances totalling $57,840. He has decided to write off an irrecoverable
debt of $320. His receivables allowance at the last year-end was $1,368. He has calculated that this
should be revised to $1,247.
What is the resulting charge to Jerome’s statement of profit or loss?
A. $199
B. $441
C. $1,567
D. $1,688
Question#11:
Kitty has trade receivables of $125,000. At 31 October 20X9 she discovered that one of her customers,
Mr. Fable, is bankrupt and cannot pay any of his $8,000 debt.
Another customer, Mrs. Storey, is in financial difficulty and Kitty has agreed that only half of the debt of
$12,500 should be paid.
What journal entry does Kitty need to post to record the above?
A. Dr Irrecoverable debts$8,000 Dr Sales$6,250 Cr Receivables$14,250
B. Dr Receivables$14,250 Cr Irrecoverable debts$14,250
C. Dr Irrecoverable debts$20,500 Cr Allowance for receivables$20,500
D. Dr Irrecoverable debts$14,250 Cr Receivables$14,250
Question#12:
Jason has received payment for a debt that had been written off as irrecoverable.
What debit and credit should be used to record the correct journal entry for this transaction?
Cash Receivables control account Irrecoverable debts
Debit
Credit
Question#13:
At 31 December 20X2 a company's receivables totalled $400,000 and an allowance for receivables of
$50,000 had been brought forward from the year ended 31 December 20X1.
It was decided to write off debts totalling $38,000 and to adjust the allowance for receivables to 10% of
the receivables.
What charge for receivables expense should appear in the company's statement of profit or loss for
the year ended 31 December 20X2?
A. $74,200
B. $51,800
C. $28,000
D. $24,200
Question#14:
At 1 July 20X3 a limited liability company had an allowance for receivables of $83,000. During the year
ended 30 June 20X4 debts totalling $146,000 were written off. At 30 June 20X4 it was determined that a
receivables allowance of $218,000 was required.
What figure should appear in the company's statement of profit or loss for the year ended 30 June
20X4 for receivables expense?
A. $155,000
B. $364,000
C. $281,000
D. $11,000

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Question#15:
At 1 January 20X1 there was an allowance for receivables of $2,000. During the year $1,000 of debt was
written off and $800 of irrecoverable debt was recovered. At 31 December 20X1, it was decided to
adjust the receivables allowance to 10% of receivables, which were $30,000.
What was the total receivables expense in the statement of profit or loss for the year?
A. $200
B. $1,200
C. $1,800
D. $2,800

From the desk of Sir Mustafa Ahmed Mirchawala: Page 4