At the year-end, a business has trade receivables amounting to $52000. In the draft statement of financial position, the allowance for irrecoverable debts is $3000. The allowance for irrecoverable debts will be revised to 5% of trade receivables. What effect will this change in the allowance have?
- Aon profit: decrease by $2600; on current assets: decrease by $400
- Bon profit: decrease by $2600; on current assets: decrease by $2600
- Con profit: increase by $400; on current assets: decrease by $400
- Don profit: increase by $400; on current assets: increase by $400