Irrecoverable Debt & Allowance For Recivables - 30%

Question 1

When should a receivable be classed as an asset

Answer 1

A receivable should only be classed as an asset if it is recoverable

Question 2

What is the double entry for irrecoverable debts

Answer 2

DEBIT - irrecoverable debt expense ( SPL)
CREDIT - Trade receivables (SOFP)

Question 3

What is the double entry for an irrecoverable debt that is then paid ?

Answer 3

DEBIT Bank
CREDIT irrecoverable debt expense

Question 4

Why might a company make an allowance for receivables ?

Answer 4

A business may make an allowance for receivables to account for some receivables not being collectible

Question 5

What is the double entry to increase the allowance for receivables

Answer 5

DEBIT increase/ decrease in allowance for recivables
CREDIT allowance for receivables

Question 6

What is the double entry for deacreasing the allowance for recivables

Answer 6

DEBIT allowance for receivables
CREDIT increase/decrease in allowance for receivables

Question 7

What is the double entry for a debt that has previously been deemed doubtful, but which is now irrecoverable

Answer 7

DEBIT Irrecoverable debt
CREDIT Trade receivables

Question 8

What is the double entry for the allowance for receivables

Answer 8

DEBIT Irrecoverable debt expense
CREDIT Allowance for receivable’s