The following transactions are to be recorded. At the beginning of year 1 an allowance for irrecoverable debts account is to be opened. It should show an allowance of 2 per cent against trade receivables of £50,000. During the year irrecoverable debts of £2,345 are to be charged to the allowance account. At the end of year 1 the irrecoverable debts allowance is required to be 2 per cent against trade receivables of £60,000. In year 2 irrecoverable debts of £37 are to be charged against the account. At the end of year 2 an allowance of 1 per cent against trade receivables of £70,000 is required.

Required
Prepare an allowance for irrecoverable debts account for the two years. Show in the account the double entry for each item, and carry down the balance at the end of each year.