Blane commenced business on 1 January 20X6 and prepares her financial statements to 31 December every year. For the year ended 31 December 20X6, bad debts written off amounted to £1,400. It was also found necessary to create a provision for doubtful debts of £2,600. In 20X7, debts amounting to £2,200 proved bad and were written off. J Sweeny, whose debt of £210 was written off as bad in 20X6, settled her account in full on 30 November 20X7. As at 31 December 20X7 total debts outstanding were £92,000. It was decided to bring the provision up to 4% of this figure on that date. In 20X8, £3,800 debts were written off during the year, and another recovery of £320 was made in respect of debts written off in 20X6. As at 31 December 20X8, total debts outstanding were £72,000. The provision for doubtful debts is to be increased to 5% of this figure. You are required to show for the years 20X6, 20X7 and 20X8, the (a) Bad Debts Account. (b) Bad Debts Recovered Account. (c) Provision for Doubtful Debts Account?
Blane commenced business on 1 January 20X6 and prepares her financial statements to 31 December every year. For the year ended 31 December 20X6, bad debts written off amounted to £1,400. It was also found necessary to create a provision for doubtful debts of £2,600. In 20X7, debts amounting to £2,200 proved bad and were written off. J Sweeny, whose debt of £210 was written off as bad in 20X6, settled her account in full on 30 November 20X7. As at 31 December 20X7 total debts outstanding were £92,000. It was decided to bring the provision up to 4% of this figure on that date. In 20X8, £3,800 debts were written off during the year, and another recovery of £320 was made in respect of debts written off in 20X6. As at 31 December 20X8, total debts outstanding were £72,000. The provision for doubtful debts is to be increased to 5% of this figure. You are required to show for the years 20X6, 20X7 and 20X8, the (a) Bad Debts Account. (b) Bad Debts Recovered Account. (c) Provision for Doubtful Debts Account?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Blane commenced business on 1 January 20X6 and prepares her financial statements to 31
December every year. For the year ended 31 December 20X6, bad debts written off amounted to
£1,400. It was also found necessary to create a provision for doubtful debts of £2,600.
In 20X7, debts amounting to £2,200 proved bad and were written off. J Sweeny, whose debt of
£210 was written off as bad in 20X6, settled her account in full on 30 November 20X7. As at
31 December 20X7 total debts outstanding were £92,000. It was decided to bring the provision up
to 4% of this figure on that date.
In 20X8, £3,800 debts were written off during the year, and another recovery of £320 was made
in respect of debts written off in 20X6. As at 31 December 20X8, total debts outstanding were
£72,000. The provision for doubtful debts is to be increased to 5% of this figure.
You are required to show for the years 20X6, 20X7 and 20X8, the
(a) Bad Debts Account.
(b) Bad Debts Recovered Account.
(c) Provision for Doubtful Debts Account?
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