A business keeps an allowance for irrecoverable debts equal to 2% of trade receivables. On 1 January, at the start of the financial year, trade receivables were $48\,000. On 31 December, at the end of the financial year, trade receivables were $37\,000. When the business owner drew up the statement of profit or loss for the year ended 31 December, an irrecoverable debt of $1\,600, incurred during the year, had not been written off. No adjustment had been made to account for the allowance for irrecoverable debts at 31 December. Profit for the year was overstated by what amount?
- A$892
- B$1\,348
- C$1\,852
- D$2\,308