As at 1 April 2010 Ronan’s trade receivables amounted to £186,500 and his transactions with his customers during the year ended 31 March 2011 are stated on the right. Ronan maintains a 4% allowance for doubtful debts. The amount stated as cash received from customers includes £4,300 received from Maggie Fish whose debt had been written off as bad in the previous accounting period.

Required:

(a) Explain how the amount received from Maggie Fish should be accounted for.

(b) Set out the Allowance for doubtful debts account showing the amount to be written off as bad debt.

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Credit sales Bad debts written off Returns inwards Cash received from customers £528,400 £8,400 £19,200 £471,600