Skip to content

ACCA Applied Knowledge · Financial Accounting · Receivables and payables

At 30 June 20X5, Vega Co's receivables ledger total is $210,000. This includes $10,000 owed by a customer that is to be written off and $20,000 owed by a customer for which a specific allowance of 50% is required. A general allowance of 3% is applied to the remaining receivables after the write-off and the specific allowance debt is excluded from the general base. The opening allowance was $5,000. What is the total profit or loss charge for the year relating to receivables, including the write-off?

The total charge is $20,400. After the $10,000 write-off, the closing allowance is $10,000 specific plus $5,400 general (3% of $180,000), totalling $15,400. The increase over the opening $5,000 is $10,400, which is added to the $10,000 write-off.

  1. A$15,000
  2. B$15,400
  3. C$16,000
  4. D$20,400Correct

Explanation

Write-off $10,000 leaves $200,000. Specific allowance is 50% x $20,000 = $10,000. General base is $200,000 - $20,000 = $180,000, and 3% of it is $5,400. Closing allowance is $15,400. Increase over opening $5,000 is $10,400. Total charge is $10,000 + $10,400 = $20,400. Option $15,400 forgets the write-off and opening allowance.

Did you get it right without looking?

One question tells you little. A timed set on Receivables and payables shows your real accuracy, how long you take and where you lose marks.

Practise Receivables and payablesFree diagnostic mock

More Receivables and payables questions