Umberto makes an allowance of 1.5% against his total trade receivables each year. In the year to 31 August 2012 he has used up £650 of this allowance because a company has gone out of business owing...

Umberto makes an allowance of 1.5% against his total trade receivables each year. In the year to 31 August 2012 he has used up £650 of this allowance because a company has gone out of business owing him money.

Umberto’s trade receivables at 31 August 2011, before allowance, were £366 000. At 31 August 2012 trade receivables, before any allowance is taken into account, are £390 000. How are trade receivables presented in Umberto’s statements of financial position at 31 August 2011 and 31 August 2012? What is the effect of the allowance for doubtful receivables on Umberto’s income statement for the year ending 31 August 2012?