accounting adjustments

hello i have a big trouble when i try to adjust this tips
-allowance for doubtful debts needs adjusting to 2% of outstanding trade receivables
- The depreciation charge for the year has been calculated at £26,000 instead of the correct figure of £25,500
- A receipt from a customer for £650 had been debited to the bank and also debited to the SLCA

thanks for your help!


  • bristoleno17
    bristoleno17 Registered Posts: 8

  • PeterC
    PeterC Registered, Tutor Posts: 243 Dedicated contributor 🌟 🐵 🌟
    Doubtful debts:
    Assume that allowance for doubtful debts (ADD) was £1,000 and needs to become £1,200
    The ADD account currently has a Cr balance of £1,000
    Cr ADD to increase this to £1,200
    Dr ADD adjustment account

    The original transactions was
    Dr Depreciation charge £26,000
    Cr Accumulated depreciation £26,000
    Both these were £500 too much, so
    Cr Depreciation charge £500
    Dr Accumulated depreciation £500

    Receipt from customer
    £650 debited to SLCA should have been credited to SLCA
    The trial balance will be out by £1,300
    Fix the SLCA by crediting it with £1,300
    The £1,300 debit goes to the suspense account

    see also
  • PeterC
    PeterC Registered, Tutor Posts: 243 Dedicated contributor 🌟 🐵 🌟
    Thank you for providing the balances
    Depreciation charge: this looks like a clerical error, it should be £25,500

    Receipt from customer:
    Cr SCLA £1,300 (see above)

    Bad debt of £2,600:
    Dr Irrecoverable debts £2,600
    Cr SLCA £2,600

    SLCA becomes 113,900 - 1,300 - 2,600 = £110,000
    2% of this is £2,200, so Allowance for Doubtful Debts (ADD) should be £2,200, not £440 (difference = £1,760)
    Cr ADD Adjustment £1,760
    Cr ADD £1,760
Privacy Policy