5.13 Beech is a retailer. Most of his sales are made on credit terms. The following information relates to the first four years that he has been in business:

The trade is one that experiences a high level of bad debts. Accordingly, Beech decides to set aside a provision for bad and doubtful debts equivalent to 10 per cent of trade debtors as at the end of the year.
Required:

(a) Show how the provision for bad and doubtful debts would be disclosed in the respective balance sheets as at 31 January 2004, 2005, 2006 and 2007; and

(b) calculate the increase/decrease in provision for bad and doubtful debts transferred to the respective profit and loss accounts for each of the four years.

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2004 2005 55000 Trade debtors as at 31 January: 60000 2006 65000 2007 70000