Mr Green runs a small 'do-it-yourself business. During the year to 31 December 1984 his sales were: cash sales £10,000, credit sales £5,000.

At 31 Decembe r 1984 his debtors, who totalled £800, included:

(i) £50 owed by J. Bloggs and Co. who had just been made bankrupt.

(ii) £30 owed by Mr Chips who had recently become unemployed.

(iii) £10 owed by a friend of Mr Green who was well known for being slow in paying his debts.

Required:

(a) Explain how you would treat each of these items, and what provision for doubtful debts might be made for the year ended 31 December 1984.

(b) Show the relevant extract from the balance sheet for the year ended 31 December 1984.