Thought that as a last one you might appreciate something not involving margins and markups. This one's also a bit easier than the others.
A firm has a sales ledger control balance of £75,000.
Before the accounts are finalised a bad debt provision of £1,000 is written off.
The provision for bad debts is to be 5% of debtors.
The current provision is £2,000.
The charge to the P&L for the provision for this year should be what?
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Very close. You'll kick yourself when you realise what you've forgotten!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
ok, I've assumed that the original provision was £3000, being the current provision of £2000 plus the £1000 w/o prior to year end. 5% of 75000 is £3750, less £2000 current provision leaves £1750 to charge. Just putting my steel toetectors on!
So close, your going to kick yourself now. The error is the assumption. The write off of the provision means that it was actually applied.
Debtors of £75,000 - £1,000 written off = £74,000 * 5% = £3,700 Less existing provision of £2000 is £1,700.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Ah I thought that since the w/o was applied before the year end, the debtors had gone down from 76k to 75k...silly me! Still it was there or thereabouts!
It was adding post year end adjustments into the mix that was the slight complexity on that one... You might notice, all of them have a slight twist.
Right, back to Excel. The 2007 version is growing on me but I'm lost as to why as it has taken something that's simple and complicated it for no good reason other than making it prettier... Then again, same could be said for green screens and windows front ends (Give me a green screen system any day).
Just preying now that my existing clients who are running my Macro's all decide to upgrade to Excel 2007 or 2010 as that should make for a very (very, very) profitably few months doing complete rewrites of Macro's.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
but don't forget that the answer is the £1,700 bit not the £3,700 bit as you still need to subtract the existing provision.
Glad your having a good day and hope that the credit control gig works out for you. I really enjoy credit control as well especially where you get to the bottom of a problem case.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
