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.

You are required to show:

(a) Bad Debts Accounts for each of the three years.

(b) Provision for Doubtful Debts Accounts for each of the three years.

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

Transcribed Image Text:

19X5 19X6 19X7 Bad debts written off year to 31 December 656 Debtors at 31 December 22,000 1,805 40,000 3,847 60,000 Per cent provision for bad debts 7 546