At 1 January 20X4, there was an allowance for receivables of $3,000. During the year, $1,000 of debts were written off as irrecoverable, and $800 of debts previously written off were recovered. At 31 December 20X4, it was decided to adjust the allowance for receivables to 10% of receivables which are $20,000.
What is the total receivables expense for the year?
Answer
| $ | $ | |
| Receivables allowance at 31.12.X4 (10% of $20,000) | 2,000 | |
| Receivables allowance at 1.1.X4 | 3,000 | |
| Decrease in allowance | 1,000 | |
| Irrecoverable debts written off | (1,000) | |
| Debt recovered | 800 | |
| Total credit to statement of profit or loss | 800 |