Question 1

**Section A**

At 1 January 20X8, Delta Merchants had an allowance for receivables of $4,500. During the year, a debt of $1,200 was written off as irrecoverable. At 31 December 20X8, total trade receivables were $85,000. Delta wishes to maintain an allowance for receivables of 5% of the year-end balance.

What is the charge to the statement of profit or loss for receivables expense for the year ended 31 December 20X8?

Accepted Answer

Calculate the required closing allowance. Compare it to the opening allowance to find the increase/decrease. Combine this movement with the irrecoverable debts written off during the year to find the total P&L charge.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to net the change in the allowance against the written-off debt, or treating a decrease in the allowance as an expense.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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