PRC-1 · Chapter 5 · Question 60 of 100
'Beta Corp' has a Gross Receivables balance of Rs. 400,000. A debt of Rs. 15,000 is to be written off. A specific allowance of Rs. 20,000 is required for another customer. If a 5% general allowance is applied to the remainder, what is the TOTAL closing allowance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 38,250
Explanation
Base for general allowance = 400,000 - 15,000 (bad debt) - 20,000 (specific customer balance) = 365,000. General allowance = 5% x 365,000 = 18,250. Total allowance = 18,250 + 20,000 (specific) = Rs. 38,250.
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