PRC-1 · Chapter 5 · Question 98 of 100
After writing off bad debts, Rashid has outstanding receivables of Rs. 238,750. He creates specific allowances of Rs. 450 and Rs. 1,200. He also maintains a general allowance of 5% of remaining receivables. What is the Net Receivables amount on the SOFP?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 225,245
Explanation
Specific allowance = 450 + 1200 = 1650. Base for general = 238,750 - 1650 = 237,100. General allowance = 5% of 237,100 = 11,855. Total allowance = 1650 + 11,855 = 13,505. Net Receivables = 238,750 - 13,505 = Rs. 225,245.
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