PRC-1 · Chapter 5 · Question 35 of 100
At year-end, gross receivables are Rs. 540,000. A specific debt of Rs. 48,000 is to be written off. A 6% general allowance is to be maintained. The opening allowance was Rs. 25,000. What is the INCREASE in the allowance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 4,520
Explanation
Receivables = 540,000 - 48,000 = 492,000. Closing allowance = 6% x 492,000 = Rs. 29,520. The opening allowance was 25,000. Increase = 29,520 - 25,000 = Rs. 4,520.
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