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Question
The Allowance for Impairment on Receivables in the accounts of WonderNut at 30 June 2018 was $18,500 and the Receivables balance was $312,785.
During the year, the business made credit sales of $288,000 and gave a cash discount of $14,785 to credit customers. A cash amount of $480,000 was also received from these trade receivables during the financial year. $7,500 were to be written off at the financial year end of 30 June 2019. Based on past experience, WonderNut wishes to set the allowance at 10% of the receivables.
What are the correct journal entries to record the impairment loss on receivables for the year ended 30 June 2019?
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