8 irrecoverable debts and allowances

Question 1

what is the key journal entry for irrecoverable debt

Answer 1

Question 2

double entry for irrecoverable debt that is subsequently paid and what sheet does it go on

Answer 2

P+L

Question 3

key journal entry for an entry into the allowance for receivables and explain what happens if you increase or decrease the allowance

Answer 3

Question 4

explain the exam smart for when a question asks for the irrecoverable debt expense in the SPL (may ask for charge to SPL) (or irrecoverable debt expense). 3 step approach to get it quickly

Answer 4

Question 5

3 Enigma plc has reduced its allowance for receivables by £600.
Indicate whether each of the following statements are true or false.
Requirements
The reduction in the allowance for receivables will increase gross profit by £600.
True A
False B
The reduction in the allowance for receivables will increase net profit by £600.
True C
False

Answer 5

Correct answer(s):
False B
The reduction in the allowance for receivables will decrease the irrecoverable debts expense. This is
not part of gross profit and therefore has no effect.
Correct answer(s):
True C
The reduction in the allowance for receivables will decrease the irrecoverable debts expense which
will in turn increase net profit.