PRC-1 · Chapter 5 · Question 40 of 100
A company has Gross Receivables of Rs. 50,000. It determines that customer 'X' (who owes Rs. 5,000) is doubtful, so it creates a specific allowance of 50%. A general allowance of 2% is applied to the rest. What is the total allowance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 3,400
Explanation
Specific allowance = 50% of 5,000 = 2,500. Remaining 'good' pool = 50,000 - 5,000 = 45,000. General allowance = 2% of 45,000 = 900. Total allowance = 2,500 + 900 = Rs. 3,400.
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