What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 1? A) 16,500 B) 23,000 C) 17,000 D) 20,000 What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 2? A) 47,000 B) 44,500 C) 36,000 D) 40,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
At the end of its first year of trading, a company has total trade receivables (debtors) of £20,000.
The company accountant decides that there is an element of doubt about the ability of some of
the trade receivables (debtors) to make payment. The accountant therefore sets up a provision for
doubtful debts in the amount of £3,000. During the company's second year of trading, trade
receivables (debtors) previously regarded as doubtful, in the amount of £500, succeed in making
payment to the company. At the end of its second year of trading, the company has total trade
receivables (debtors) of £40,000, including the remaining trade receivables (debtors) identified
as doubtful at the end of the first year. On reviewing trade receivables (debtors) at the end of the
second year, the company accountant concludes that a total of £4,000 of receivables (debtors)
should be classified as doubtful.
What is the resultant figure for trade receivables (debtors), after deducting the provision for
doubtful debts, that will appear in the statement of financial position (balance sheet) of the
company at the end of Year 1?
A) 16,500
B) 23,000
C) 17,000
D) 20,000
What is the resultant figure for trade receivables (debtors), after deducting the provision for
doubtful debts, that will appear in the statement of financial position (balance sheet) of the
company at the end of Year 2?
A) 47,000
B) 44,500
C) 36,000
D) 40,000
Transcribed Image Text:At the end of its first year of trading, a company has total trade receivables (debtors) of £20,000. The company accountant decides that there is an element of doubt about the ability of some of the trade receivables (debtors) to make payment. The accountant therefore sets up a provision for doubtful debts in the amount of £3,000. During the company's second year of trading, trade receivables (debtors) previously regarded as doubtful, in the amount of £500, succeed in making payment to the company. At the end of its second year of trading, the company has total trade receivables (debtors) of £40,000, including the remaining trade receivables (debtors) identified as doubtful at the end of the first year. On reviewing trade receivables (debtors) at the end of the second year, the company accountant concludes that a total of £4,000 of receivables (debtors) should be classified as doubtful. What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 1? A) 16,500 B) 23,000 C) 17,000 D) 20,000 What is the resultant figure for trade receivables (debtors), after deducting the provision for doubtful debts, that will appear in the statement of financial position (balance sheet) of the company at the end of Year 2? A) 47,000 B) 44,500 C) 36,000 D) 40,000
Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Receivables Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education