Question

"Alan has a closing receivables balance of £180,000. Against this he wants to make an allowance against two receivables: he wants to create an allowance against the full balance of £6,000 on Zhiang's account, and he wants to provide for 25% of the balance (£12,000) on Helena's account.

Calculate the closing allowance for receivables for the year."

Answer 1

To calculate the closing allowance for receivables, we add the full allowance of £6,000 for Zhiang's account and 25% of Helena's account balance (£12,000), resulting in £3,000. The total closing allowance for receivables for the year is £9,000.

Step-by-step explanation:

The student has asked to calculate the closing allowance for receivables for the year. Alan wants to create an allowance against the full balance of £6,000 on Zhiang's account and provide for 25% of the balance (£12,000) on Helena's account. To calculate this, we do the following:

For Zhiang's account: £6,000 (Full allowance for the receivable balance)

For Helena's account: 25% of £12,000 = £3,000 (25% allowance for the receivable balance)

Adding these two amounts together:

£6,000 (Zhiang's allowance) + £3,000 (Helena's allowance) = £9,000 (Total closing allowance for receivables)

Therefore, the closing allowance for receivables for the year would be £9,000.