Nigel Barker runs a small business. He decided to make a provision for bad debts equal to 5 per cent of the total debtors outstanding at the end of each financial year.

You are required to:

(a) Prepare the provision for bad debts account for the years ended 31 December 20-5 and 20-6.

(b) Show the entries in the profit and loss account for the years 20-5 and 20-6.

(c) Show the balance sheet entries (extracts) for the years 20-5 and 20-6.

Transcribed Image Text:

Total debtors 9,000 10,000 31 December 20-5 31 December 20-6