A business starts its year with £800 in a provision for doubtful debts. At the end of the year, receivables total £12,000 of which £600 are considered doubtful. What is the effect on the income statement and balance sheet?

a. £200 is added to profit and the balance sheet shows Receivables less provision as

£11,400

b. £600 is deducted from profit and the balance sheet shows Receivables less provision as £11,400

c. £1,400 is deducted from profit and the balance sheet shows Receivables less provision as £10,600

d. £800 is added to profit and the balance sheet shows Receivables less provision as

£11,400