Self-test At 31 December 2009 Mike’s ledger contained the following balances:

Trade debtors 20,000 Provision for bad debts 3,340 The provision for bad debts consisted of a general provision of £800 and specific provisions for the following debtors:

D Swart 420 J Higgins 1,200 L Beck 920 During the year ended 31 December 2010 the following transactions took place:
(i) On 30 April D Swart was declared bankrupt and a payment of £95 was received on 18 July 2010.
(ii) On 15 June Mike was advised that the full debt due by J Higgins included in the debtors at 31 December 2009 was bad.
(iii) On 3 August L Beck paid the amount due by him in full.
Mike wishes to make provision for future bad debts by providing a general provision for bad debts of 5 per cent of the year-end debtors.
You are required to show the ledger accounts for the above items. You can assume that no other transactions took place on the debtors’ ledger other than those given in the question.
Indicate clearly what charges are to be made to the profit and loss account for the year.