a)State the causes of depreciation(2 marks)

b)A business started trading on 1st January 2016. During the two years ended 31st December 2017 the following debts were written off to bad debts account on the dates stated:

31st August 2016N. JaneKshs.8,500

30th September 2016M. AnnKshs.14,000

28th February 2017N. MaryKshs.18,000

31st August 2017J. SusanKshs.6,000

30th November 2016A. AliceKshs.25,000

On 31st December 2016 there had been a total of debtors remaining of Kshs.4,050,000. It was decided to make a provision for doubtful debts of Kshs.55,000.

On 31st December 2017 there had been a total of debtors remaining of Kshs.4,730,000. It was decided to make a provision for doubtful debts of Shs.60,000

You are required to show:

i)The bad debts account and the provision for bad debts account for each of the two years. (2 marks)

ii)The charges to the statement of financial performance for each of the two years.(3 marks)

iii)The relevant extracts from the statement of financial position as at 31st December 2016 and 2017(3 marks)