A business makes a provision for doubtful debts of 3% of debtors, also a provision of 1% for discount on debtors.

On 1 January 20X8 the balances brought forward on the relevant accounts were provision for doubtful debts £930 and provision for discounts on debtors £301.

You are required to:

(a) Enter the balances in the appropriate accounts, using a separate Provision for Doubtful Debts Account.

(b) During 20X8 the business incurred bad debts £1,110 and allowed discounts £362. On 31 December 20X8 debtors amounted to £42,800. Show the entries in the appropriate accounts for the year 20X8, assuming that the business’s accounting year ends on 31 December 20X8, also balance sheet extracts at 31 December 20X8.