accounting assignment question HELP

starface

I'm doing an accounting assignment for class. Nothing major just a cash budget, P & L and Balance sheet for a basic problem. However it's just not balancing and it's beginning to drive me mad. I think the problem is coming from one of the extra bits of information provided that I may not be interpenetrating it correctly....

"Staff will incur costs for travelling on behalf of the company. These are expected to be at a rate of 3,500 each month during the month when holidays are being taking by clients. During each of the other three months the figure will be 500."

Initially I was taking this as an expense in the cash budget and P & L but now when I reread it I am confused. Is this an expense to staff? How is this handled in these accounts?

Any help is really appreciated.

gottcha_goin

Under the assumption that the expenses are claimed against the company by staff it would probably be debit an expense in the P&L of 5,000, credit cash in the balance sheet of the same amount. In the cash budget it will be an outflow of 5,000. Have u done this already? Might be some sort of quirk in the question otherwise.

Itchyness

Can I hijack?

A trader maintains allowances for receivables of 5 % of her trade receivables. Her year end balances include:

Trade Rec 536400
Bad Debts already written off 5400
Allowances for Rec 29320

Another debt of 2800 is to be written off and the allowance for rec to be maintained at the usual level. Identify the net charge in the income statement.

Maybe just looking at it too long. It says the answer is 5560. Cant work it out though.

An Citeog

Itchyness wrote: »

Can I hijack?

A trader maintains allowances for receivables of 5 % of her trade receivables. Her year end balances include:

Trade Rec 536400
Bad Debts already written off 5400
Allowances for Rec 29320

Another debt of 2800 is to be written off and the allowance for rec to be maintained at the usual level. Identify the net charge in the income statement.

Maybe just looking at it too long. It says the answer is 5560. Cant work it out though.

The first 2 charges are straightforward:

Dr Income Statement 5,400
Dr Income Statement 2,800
Cr Receivables 8,200

The next thing you need to do is calculate the increase/decrease in the Allowances for Rec (Provision for Doubtful Debts). The provision for the current year will be €26,680 [(536,400-2,800)*5%] which is a decrease of €2,640 of the balance b/f at the beginning of the year of €29,320 (ie. reduction of a liability). This means you'll:

Dr Provision for Doubtful Debts a/c 2,640
Cr Income Statement 2,640


Net charge on the income statement is 8,200 - 2,640 = €5,560

Itchyness

Simples...Cheers