POA @ Hillgrove - Chapter 10 Trade Receivables

Chapter 10 Trade Receivables (and Allowance for Impairment of Trade Receivables)

The recordings in this chapter show students how to

1) Prepare journal entries pertaining to allowance for impairment of trade receivables and impairment loss on trade receivables

2) Prepare statement of financial performance (extract): amount of increase/ decrease in allowance

Impairment loss on trade receivables
Reversal of impairment loss on trade receivables

3) Prepare statement of financial position (extract): ending balances

Trade receivables
Less: Allowance for impairment of trade receivables
Net trade receivable

Read through the following before watching the recordings.

Example 1 (no write-off)

Year 1: Initial creation of allowance

Year 2: Decrease in allowance

Journal entries

Statement of financial performance (extract)

Statement of financial position (extract)

Example 2

1st year - decrease in allowance

2nd year - partial write-off of amount confirmed uncollectible and subsequent decrease

Note: The partial write-off did not affect ending TR and ending allowance because the partial write-off took place during the 2nd year and not at the end of the 2nd year.