Crok Ltd. has Trade Receivables of €1,750,000 outstanding at the end of the accounting year to 31 December 2017.
The Financial Controller believed that €75,000 of those Trade Receivables were irrecoverable and that a further €140,000 were doubtful of being recoverable.
In the subsequent year it was found that the estimate of doubtful debt was over-pessimistic and that only a further €80,000 of Trade Receivables had actually proven to be bad.
Q What is the implication of the above in the Financial statements of 2017 and 2018?
Bad Debt Writte Off (75,000) Allowance for Trade Receivables (140,000) €
Trade receivables 1,675,000 Allowance for Trade Receivables (140,000)
Allowance for Trade Receivables written back 60,000
Income Statement (extracts) for the Year Ended 31 March 2017
Balance Sheet (extract) as at 31 March 2017
Income Statement (extracts) for the Year Ended 31 March 2018
