The trade debtors account as at 31 December 2004 was £39,800. The provision for doubtful debts at the same date was 3.5 percent of the balance outstanding from debtors.

During 2005, the company’s sales totalled £350,000, of which 91 percent, in value, was on credit and £318,150 was received from credit customers in settlement of their debts totalling £320,000. In addition, £450 was received from a trade debtor in a settlement of a debt which had been written off as bad during 2004.

On 31 December 2005, the following outstanding debts were written off as bad:

Business F £280 and Business H £920.

The provision for doubtful debts continues to be 3.5 percent of debtors at the year-end.

Required 

1 Show the double-entry for the trade debtors, bad debts and the provision for doubtful debts accounts for the year ended 31 December 2006.

2 Show the relevant balance sheet extract.