ACCA F3. Provided by Academy of Professional Accounting (APA) Financial Accounting (FA) 财务会计第十五讲. ACCA Lecturer: Carrie NI

Similar documents
ACCA F8. Provided by Academy of Professional Accounting (APA) Audit and Assurance (AA) 审计与鉴证业务第 7 讲 ACCA Lecturer: Andy Qu

ACCA F3. Provided by Academy of Professional Accounting (APA) Financial Accounting (FA) 财务会计第十二讲. ACCA Lecturer: Carrie NI

ACCA F8. Provided by Academy of Professional Accounting (APA) Liability, Capital and Directors Emoluments ACCA Lecturer: Tom Liu

ACCA P4 习题详解. Provided by Academy of Professional Accounting (APA) Advanced Financial Management (AFM) 高级财务管理第四讲 ACCA Lecturer: Lily Wang

ACCA F3. Provided by Academy of Professional Accounting (APA) Financial Accounting (FA) 财务会计第二十九讲. ACCA Lecturer: Rachel XU

ACCAspace ACCA F5. Provided by ACCA Research Institute. Performance Management (PM) 绩效管理 ACCA Lecturer: Lethe Zheng

ACCAspace ACCA F9. Provided by ACCA Research Institute. Financial Management (FM) 财务管理 ACCA Lecturer: Sinny Shao. ACCAspace 中国 ACCA 特许公认会计师教育平台

ACCA F4 习题详解. Provided by Academy of Professional Accounting (APA) Corporate and Business Law (CL) 公司法和商法第七讲 ACCA Lecturer: Carrie Ni

ACCAspace ACCA F5. Provided by ACCA Research Institute. Performance Management (PM) 业绩管理 ACCA Lecturer: Kimberley Gong. ACCAspace 中国 ACCA 特许公认会计师教育平台

ACCA F8. Provided by Academy of Professional Accounting (APA) Introduction to Audit Evidence ACCA Lecturer: Tom Liu. ACCAspace 中国 ACCA 特许公认会计师教育平台

Irrecoverable Debts & Allowances for Receivables. Essentials Items to Know.

ACCAspace ACCA P4. Provided by ACCA Research Institute. Advanced Financial Management (AFM) 高级财务管理 ACCA Lecturer: Lily Wang

Osborne Books Update. Final Accounts Preparation Tutorial. Amended pages 67 to 71 Case Study: ELECTROPARTS

(c) Debtor overpaid the amount owed. Debtor paid his account and later returned goods.

FFA. Financial Accounting. OpenTuition.com ACCA FIA exams. Free resources for accountancy students

Please spread the word about OpenTuition, so that all ACCA students can benefit.

Teacher: Mr. Jones ACCOUNTS WORKBOOK GRADE 11 PRINCE WILLIAMS HIGH SCHOOL TERM 1

Advanced Financial Accounting

Cambridge International Examinations Cambridge Ordinary Level

Subsidiary Ledgers & Control Accounts. F. M. Kapepiso

SECONDARY SCHOOL - IMRIEĦEL HALF-YEARLY EXAMINATIONS 2017/2018

MARK SCHEME for the October/November 2010 question paper for the guidance of teachers 0452 ACCOUNTING. 0452/22 Paper 2, maximum raw mark 120

The Liquidation Auditing Report of Tubular Precision Products (Suzhou) Co., Ltd.

egyptigstudentroom.com

THIS IS A LEGACY SPECIFICATION MODIFIED LANGUAGE

Cambridge International Examinations Cambridge International General Certificate of Secondary Education

The 'Dynamic Balance Sheet'

Prepare the necessary journal entries to correct the above. Narrations are not required.

Chapter 5. Control Accounts. Notes to teachers

ACCA Paper F3. Financial Accounting (INT) Class Notes

Paper Reference(s) 7011/01 London Examinations GCE. Friday 15 May 2009 Afternoon. Source booklet for use with Questions 1 to 6.

Cambridge International Examinations Cambridge International General Certificate of Secondary Education

Accounting Technicians Ireland First Year Examination: May 2017 Paper: FINANCIAL ACCOUNTING Tuesday 9 May a.m. to p.m.

Cambridge International Examinations Cambridge Ordinary Level

Soft clean eraser Soft pencil (type B or HB is recommended)

Final Accounts Preparation

ACCA Competition for University Students - Are YOU a Finance Leader of Tomorrow?

Types of Accounts and Rules of Debit & Credit

SUGGESTED SOLUTIONS. KE1 Financial Accounting & Reporting Fundamentals. March All Rights Reserved

London Examinations GCE Accounting (Modular Syllabus) Advanced Subsidiary Unit 1: The Accounting System and Costing

Accounting Technicians Ireland First Year Examination: August 2017 Paper: FINANCIAL ACCOUNTING Tuesday 15 August a.m. to p.m.


ACCAspace ACCA P6. Provided by ACCA Research Institute. Advanced Taxation(uk) (AT uk) 高级税务 ( 英国 ) ACCA Lecturer: Shelley Song. Copyright ACCAspace.

Annual Qualification Review

MARK SCHEME for the May/June 2011 question paper for the guidance of teachers 0452 ACCOUNTING. 0452/22 Paper 2, maximum raw mark 120

Multiple choice questions for Accounting for Non-Accountants 10 th edition

Aim: to use a general journal entry from the previous lecture (week 2) and post to a T account.

Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level

Assessment Schedule 2009 Accounting: Prepare financial statements and related accounting entries for sole proprietors (90224)

HAINAN AIRLINES CO., LTD.

Notes Receivable A note is a written promise to pay a specific amount at a specific future date. Includes an interest cost for the term of the note

Cambridge International Examinations Cambridge Ordinary Level

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education

HIRE PURCHASE ACCOUNTS

MARK SCHEME for the October/November 2013 series 0452 ACCOUNTING. 0452/22 Paper 2, maximum raw mark 120

第十五届 上海理财博览会. Shanghai International Money Fair th. China's largest finance information & exchange platform for investors

(b) Suspense a/c. trial balance 14 Stationery 50. Discount allowed Discount received. 14 Joe jones 190

Budgeting. Mr Crosthwaite. Mindarie Senior College

7110 PRINCIPLES OF ACCOUNTS

8 Self-Balancing Ledgers

OXFORD CAMBRIDGE AND RSA EXAMINATIONS ADVANCED SUBSIDIARY GCE F001 ACCOUNTING. Accounting Principles

This document consists of 13 printed pages.

REVIEW QUESTIONS. Rent expense Accrual $ $ A. 100,000 20,000

Wednesday 22 May 2013 Afternoon

MARK SCHEME for the May/June 2012 question paper for the guidance of teachers 0452 ACCOUNTING. 0452/11 Paper 1, maximum raw mark 120

THE TRAINING PLACE OF EXCELLENCE Control accounts, Journals & the Banking system Practice Assessment: Answers

Question 1 SUGGESTED ANSWERS AND EXAMINER S COMMENTARY. Final exam Diploma in IFRSs 15 July 2013

Cambridge International Examinations Cambridge International General Certificate of Secondary Education

University of Missouri System Accounting Policies and Procedures

Published. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers.

CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education

Please write all your answers in blue or black ink in the answer book provided. There are 3 questions to attempt.

Accounting 284 April 9th, 2017

Source documents are posted to

Intermediate Bookkeeping

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS International General Certificate of Secondary Education

Cambridge International Examinations Cambridge International General Certificate of Secondary Education

ACCA F1 ACCOUNTANT IN BUSINESS

PRINCIPLES OF ACCOUNTS 7110/2

HAINAN AIRLINES CO., LTD.

Profit (P) = Increase or Decrease in Net Assets (I) + Drawings (D) Capital (C) Income Expense = Profit / (Loss) Asset = Liability Capital

THE TRAINING PLACE OF EXCELLENCE Accounts Preparation Practice Assessment: Questions

Chapter 2 Review of the Accounting Process

Slide 5.1. Chapter 5

Cambridge International Examinations Cambridge International General Certificate of Secondary Education

What will be the effect of this adjustment on the financial statements?

Bought to you by AS- Level Accounting Unit 2 Revision Notes

QUESTION 91: BASIC CONSOLIDATION. Statement of profit or loss and other comprehensive incomes for the year ended 31 March 2006

Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level. Published

IFA Paper 2. Accounting. Mark scheme. November ICSA 2016 Page 1 of 11

Policy No Northwest Louisiana Technical College

PV Obligations >PV Assets

IFRS Training. IAS 24 Related Party Disclosure. Professional Training Services

Cambridge International Examinations Cambridge Ordinary Level

LEVEL 2 CERTIFICATE IN BOOKKEEPING AND ACCOUNTING SKILLS 05529

(iv) The amount due to Bill by the partnership was to be left in a loan account, bearing an interest of 2% per annum.

S.5 BUSINESS, ACCOUNTING AND FINANCIAL STUDIES Accounting Module


Wuhan Boiler Company Limited

MODEL ANSWERS PAPER 1

Transcription:

Professional Accounting Education Provided by Academy of Professional Accounting (APA) ACCA F3 Financial Accounting (FA) 财务会计第十五讲 ACCA Lecturer: Carrie NI ACCAspace 中国 ACCA 特许公认会计师教育平台 Copyright ACCAspace.com

D8: Irrecoverable Debts and Allowances Irrecoverable debts Allowances for receivables 2

Irrecoverable Debts Introduction Ideally a business wants to receive money from its customers as quickly as possible, but delay paying its suppliers for as along as possible. This can lead to problems. Most businesses aim to control such problems by means of credit control. Customer will be given a credit limit, which cannot be exceeded. Another tool in credit control is the age receivables analysis. 3

Irrecoverable Debts Introduction Irrecoverable debts are specific debts owed to a business which it decides are never going to be paid. They are written off as an expense in the statement of profit or loss. 4

Irrecoverable Debts Writing off irrecoverable debts When a sale on credit is made to a customer: Dr Trade receivables Cr Sales When cash is received: Dr Cash account Cr Trade receivables But if the customer goes bankrupt and then can t pay, the irrecoverable debt should be written off: Dr Irrecoverable debts expense (SOPL) Cr Trade receivables (SOFP) 5

Irrecoverable Debts Learning example Fight & Co. has trade receivables at 31 December 20x7 of $65,000. A review of customer files indicates that two customers, Ali and Tyson, which owe $7,000 and $8,000 respectively, have gone bankrupt and their debts are considered irrecoverable. Required a) Calculate the balance c/d on the trade receivables account at the end of the year. b) Calculate the irrecoverable debt expense shown in the statement of profit or loss. 6

Irrecoverable Debts Effect in subsequent periods If an irrecoverable debt previously written off is recovered, the accounting treatment from the original write-off is reverse. 7

Irrecoverable Debts Accounting treatment Cash received Dr Cash Cr Trade receivables Reverse original write off Dr Trade receivables Cr Irrecoverable debt expense OR Short method Dr Cash Cr Irrecoverable debt expense 8

Allowance for Receivables Doubtful debts A doubtful debt is a debt which is possibly irrecoverable. In this situation, a provision, known as an allowance for receivables, is made against the doubtful debt. Allowance for receivables. An amount in relation to receivables that reduces the receivables asset to its prudent valuation in the statement of financial position. It is offset against trade receivables, which are shown at the net amount. Allowance for receivables may be specific (an allowance against a particular receivables) or simply a percentage allowance based on past experience of irrecoverable debts, which is known as a general allowance. 9

Allowance for Receivables Types of allowance a) Specific: provided against a particular/named individual customer. b) General: percentage applied to total trade receivables after: I. Writing off irrecoverable debts; II. Deducting full balance of any customers for which specific allowance has been created. 10

Allowance for Receivables Accounting treatment Dr Irrecoverable debts expense (P/L) Cr Allowance for receivables (SOFP) On SOFP: Receivables Allowance X (X) X 11

Allowance for Receivables Learning example A business trade receivables account showed a year end balance of $47,440. It was decided that amounts totaling $340 should be written off as irrecoverable, a specific allowance was to be made against an amount of $400 due from Dodgy Co., a customer, and a general allowance of 2% was to be made against remaining debts. Required a) Calculate the allowance for receivables shown in the statement of financial position. b) Calculate the irrecoverable debts expense shown in the statement of profit or loss. 12

Allowance for Receivables Effect in subsequent periods Doubtful debts general allowance Allowance is usually changed at the end of each period to reflect the change in value of total trade receivables. Increase/decrease opening allowance to arrive at required closing allowance: Increase: Dr Irrecoverable debts expense Cr Allowance for receivables Decrease: Dr Allowance for receivables Cr Irrecoverable debts expense 13

Allowance for Receivables Effect in subsequent periods Doubtful debts specific allowance least year, customer pays outstanding amounts this year. A credit entry for the cash is made to the trade receivables account because the debt is still included in the total trade receivables figure. The allowance is then reversed as it is no longer needed. Account treatment Record the cash received Dr Cash (SOFP) Cr Trade receivables (SOFP) Remove allowance Dr Allowance for receivables (SOFP) Cr Irrecoverable debts expense (P/L) 14

Allowance for Receivables Effect in subsequent periods Learning example A business trade receivables account showed a year end balance of $47,440. It was decided that amounts totaling $340 should be written off as irrecoverable, a specific allowance was to be made against an amount of $400 due from Dodgy Co., a customer, and a general allowance of 2% was to be made against remaining debts. Required Show the accounting treatment for the business if, having made a specific allowance (see learning example), during the next year Dodgy Co. repays his debt of $400 to the business in cash? 15

Allowance for Receivables Effect in subsequent periods Doubtful debts - specific allowance last year, goes bad this year This debt is no longer doubtful, but definitely bad. It should therefore be removed from the trade receivables and the allowance for receivables accounts. Dr Allowance for receivables (SOFP) Cr Trade Receivables (SOFP) 16

Allowance for Receivables Learning example At 31 December 20x7, Briony s receivables account in the nominal ledger shows a balance of $14,670. She wishes to write off Gaby s debt of $1,000 and make an allowance of 50% against John s debt of $440 and 75% against Helen s debt of $240. She maintains a 4% general allowance. The balance brought forward on the allowance for receivables account was $1,250. What amount is charged to Briony s statement of profit or loss in respect of the above? A. $1,920 B. $1,330 C. $680 D. $737 17

Summary 18

Professional Accounting Education Provided by Academy of Professional Accounting (APA)