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Receivables
3.2 Increases and decreases in the allowance for receivables
The accounting entries required to increase an allowance are as follows:
Debit Irrecoverable debts expense
Credit Allowance for receivables
The accounting entries required to decrease an allowance are as follows:
Debit Allowance for receivables
Credit Irrecoverable debts expense
It is important to remember that it is only the movement on the
allowance account that is transferred to the irrecoverable debts
expense account.
Always remember to write off all irrecoverable debts before determining
the allowance for receivables required at each year end.
Tutor notes guidance – discussion points
Take students through illustration 1 from Chapter 11 of the Study Text.
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