H. Crawford had a business that adjusted its provision for bad debts at the end of the financial year, at a given percentage of the total debtors. The percentage varied each year, depending on the economic situation.

Irrecoverable debts were written off during the year to a bad debts account, as and when they occurred. On 1 January 20-1 the balance on the provision for bad debts account was £500.

From the above information you are required to:

(a) Prepare the bad debts account, showing clearly the transfer to the final accounts, for the financial years 31 December 20-1, 20-2 and 20-3.

(b) Prepare the provision for bad debts account for the years 31 December 20-1, 20-2 and 20-3, showing clearly the balance brought forward each year.

(c) An extract from the balance sheets showing how the provision would affect the total debtors, as at 31 December 20-1, 20-2 and 20-3.

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Bad debts written off during year to bad debts account Total debtors at year end 14,000 31 December 20-1 750 31 December 20-2 4,085 10,000 31 December 20-3 2,900 15,000 Rate of percentage for provision of doubtful debts % 10 8505