Hiya~ I m having F3 this Dec.
Let me ask you something.
When preparing for Income statement, if I got increas in allowance, I add that balance to irrecoverable
debt expense in Income statement as the text book teachs me.

then If I got decrease in allowance, I put that balance beneath Gross profit in Income statement as an income.
This is it! Do I have to deduct that balance from irrecoverable debt expense???? so put adjusted irrecoverable debt( original irrecoverable debt expense less decreas in allowance) balance to income statement?
I hope to hear from you soon. Thank you very much~

when there is a decrease in allowance then you will decrease the irrecoverable debts expense .. the entry shall be
Dr: Allowance for Recievables
Cr: Irrecoverable Debts Expense

This is my text book I'm studying. Kaplan 07, but there are blody many errors.

-------------------------------------------------------------------------------------
____________________Dr______ Cr
Capital.........................x
Sales...........................x
Wage...........................x
Receivable.............17,330
.
.
.
.
Irrecoverable debts....129
Allowance 4 receivabl.................588
.
.

You are given the following additional information.
-Following the final review of the receivables at 31 Dec K decides to write off another debt of $130. He also
wishes to maintain the allowance for receivables at 3% of year end balance.

Prepare an income statement.
----------------------------------------------------------

Answer
Income statement
----------------------------
Sales......x
-.
-.
______
Gross profit
-sundry income
-decrease in allowance...72
.
____________
Expenses
-( x )
-( x )
-irrecoverable debts(120+130)...250
.
.
.
____________
Net profit

------------------------------------------------------

So, they missed to deduct 'decrese in allowace' from irrecoverable debts. Right?
Thank you again.

if it goes something like

Gross Profit xx
decrease in allowance 72
irrecoverable debts (250)
net profit xxx

this method is right too. they are deducting the decrease in allowance after taking it to the income statement. they way i was taught was that we first deduct or add the allowance from the irrecoverable debts and then take it to the income statement.

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