At 1 January 20X2, Braun Company's trade receivables were totaled $500,000. A specific allowance of $10,000 had been made for Andrew Co- a credit customer who has the 6 months overdue balance of $30,000 and there is no other general allowance for receivables at this time. During the year, Andrew Co went bankrupt in December, 20X2 then the financial manager decided to make general allowance 5% at 31.12.20X2 At 31 December 20X2, Braun had total receivables of $600,000 (include the receivable from Andrew). Requirement: i. Critically analyze the accounting concept which can be used in this event relating to trade receivables of Braun Company. ii. What amount should appear in Braun Company's statement of profit or loss for receivable expense for the year ended 31 December 20X2 ii. What amount should appear in Braun Company's statement of financial position for trade receivables for the year ended 31 December 20X2 Note: your answer should show clearly any relevant journal entries.

At 1 January 20X2, Braun Company's trade receivables were totaled $500,000. A specific allowance of $10,000 had been made for Andrew Co- a credit customer who has the 6 months overdue balance of $30,000 and there is no other general allowance for receivables at this time. During the year, Andrew Co went bankrupt in December, 20X2 then the financial manager decided to make general allowance 5% at 31.12.20X2 At 31 December 20X2, Braun had total receivables of $600,000 (include the receivable from Andrew). Requirement: i. Critically analyze the accounting concept which can be used in this event relating to trade receivables of Braun Company. ii. What amount should appear in Braun Company's statement of profit or loss for receivable expense for the year ended 31 December 20X2 ii. What amount should appear in Braun Company's statement of financial position for trade receivables for the year ended 31 December 20X2 Note: your answer should show clearly any relevant journal entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

At 1 January 20X2, Braun Company's trade receivables were totaled $500,000. A specific allowance of
$10,000 had been made for Andrew Co-a credit customer who has the 6 months overdue balance of
$30,000 and there is no other general allowance for receivables at this time. During the year, Andrew Co
went bankrupt in December, 20X2 then the financial manager decided to make general allowance 5% at
31.12.2002
At 31 December 20X2, Braun had total receivables of $600,000 (include the receivable from Andrew).
Requirement:
i. Critically analyze the accounting concept which can be used in this event relating to trade receivables of
Braun Company.
ii. What amount should appear in Braun Company's statement of profit or loss for receivable expense for
the year ended 31 December 20X2
ii. What amount should appear in Braun Company's statement of financial position for trade receivables for
the year ended 31 December 20X2
Note: your answer should show clearly any relevant journal entries.

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