PRC-1 · Chapter 5 · Question 74 of 100
A customer owes Rs. 50,000 and goes bankrupt. The liquidator announces that unsecured creditors will receive 20 cents on the dollar. What amount must be written off as a bad debt?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 40,000
Explanation
The business will receive 20% (10,000). The remaining 80% (40,000) is irrecoverable and must be written off as a bad debt.
More Bad and Doubtful Debts MCQs
- Q76Which of the following actions directly REDUCES the total of 'Current Assets' in the Statement of Financial Position?
- Q77An entity has gross receivables of Rs. 868,500. It writes off Rs. 28,500. It then calculates a 5% general allowance on the remainder. If…
- Q78If an entity has a 'Bad and Doubtful Debts Expense' account with a year-end debit total of Rs. 15,000 and a credit total of Rs. 6,000…
- Q79Customer 'Zeta' owes Rs. 12,000 but is refusing to pay due to a quality dispute. The company is suing them. How should this be handled in…
- Q80When extracting an unadjusted trial balance, the 'Allowance for Doubtful Debts' balance shown represents: