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Ah Chong's account balances at the business year end show a figure for trade receivables of RM103,100
Ah Chong's account balances at the business year end show a figure for trade receivables of RM103,100. Included in this figure is an amount of RM6,500 owed by Ah Tan, which will not be received. Ah Chong usually creates a provision for doubtful debts of 2% of trade receivables.The figure for trade receivables on the statement of financial position at the year end should be: Select one: a. RM101,038. b. RM94,668. c. RM107,408. d. RM94,538. O
Expert Solution
Solution
Ah Chong
The figure for trade receivables on the statement of financial position at the year end should be –
Option a. RM101,038
Explanation – trade receivables RM103,100
Provision for doubtful debts – 2% x 103,100 = RM2,062
Net trade receivables on the statement of financial position at the year-end = RM101,038
The amount of RM6,500 is bad debts expense, which is written off against the provision for doubtful debts. This amount does not affect the trade receivables balance.
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