A business, which started trading on 1 January 19X5, adjusted its bad debt provisions at the end of each year on a percentage basis, but each year the percentage rate is adjusted in accordance with the current ‘economic climate’. The following details are available for the three years ended 31 December 19X5, 19X6 and 19X7.

Bad Debts written off year to 31 December Debtors at 31 December Per cent provision for Bad Debts

£ £

19X5 656 22,000 5 19X6 1,805 40,000 7 19X7 3,847 60,000 6 You are required to show:

(i) Bad Debts Accounts and Provision for Bad Debts Accounts for each of the three years.

(ii) Balance Sheet extracts as at 31 December 19X5, 19X6 and 19X7.