A trader maintains allowances for trade receivables to cover 2% of trade receivables outstanding at the year end. Information from her financial records include the following: £ Total trade receivables outstanding at end of year Bad debts incurred during the year still to be written off Allowances for trade receivables at beginning of year What is the total charge to the income statement for the year in respect of trade receivables? O A. £75,400 OB. £41,400 OC. £11,400 OD. £24,000 3,800,000 30,000 64,000
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
![A trader maintains allowances for trade receivables to cover 2% of trade receivables outstanding at the year end. Information from her financial records include the following:
Total trade receivables outstanding at end of year
Bad debts incurred during the year still to be written off
Allowances for trade receivables at beginning of year
What is the total charge to the income statement for the year in respect of trade receivables?
B
O A. £75,400
£
OB. £41,400
OC. £11,400
O D. £24,000
3,800,000
30,000
64,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F84504046-073c-4202-8178-d38af176ff2d%2F3e9eb439-9fdf-4222-a8d8-b159df0a1ad0%2Fr5ef32y_processed.png&w=3840&q=75)
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