Answer to Question #305512 in Accounting for COLESAW

Question

1. A new accountant just joined the company and needs your advice on the below transactions:

a) A loan of NGN15,000.00 granted to the customer on 10% interest. 

b) A loan loss write-off allowance of 2% to be made on every loan granted. 

Kindly advise her on the entries to pass in the book. 

2. What would be the treatment of IFRS 9 on receivables considering a company that core operation is granting loans to customers. 

Answer 1

1) DR Provision for bad debt

CR Receivables

2) DR Receivables and CR Interest Income