Calculate required allowance for impairment of receivables

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Reference no: EM132040197

Question - The Tile Shop is preparing its accounts for the year ended 31 December 2016. The owner Ah Seng has prepared the following ageing schedule of accounts receivable:

Total

Not yet due

1-30 days past due

31-60 days past due

> 60 days past due

130,500

$22,000

$40,000

$39,000

$29,500

 The business provides doubtful debts on the following basis:

Age of Debt

% estimated uncollectible

Not yet due

0.25%

1-30 days past due

0.75%

31-60 days past due

1%

> 61 days past due

3%

The Allowance for Impairment of Receivables Account in the General Ledger has an opening credit balance of $2,300 on 1 January 2016:

Required:

(a) Calculate the required allowance for Impairment of receivables as at 31 Dec 2016. Show your workings clearly.

(b) What amount will be reflected as Impairment of receivables in the statement of Comprehensive Income?

(c) Show the presentation of the Accounts Receivable and Allowance for Impairment of Receivable in the Statement of Financial Position of the Tile Shop as 31 Dec 2016.

(d) On 31 Jan 2017, an old customer whose account had been written off in the books of The Tile Shop paid the business the outstanding sum of $12,500. How would this affect Tile's Shop's Statement of Financial Position and Statement of Comprehensive Income?

Reference no: EM132040197

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