PRC-1 · Chapter 5 · Question 29 of 100
An entity decides to write off a debt of Rs. 8,500. Before this, its gross receivables were Rs. 330,000 and it required a specific allowance of Rs. 15,000 for another customer. What is the base amount upon which a 5% general allowance will be calculated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 306,500
Explanation
The general allowance is calculated on the remaining 'good' receivables pool. Base = Gross (330,000) - Bad debt written off (8,500) - Specific allowance customer balance (15,000) = Rs. 306,500.
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