On 25 July D J Menzies, a major business customer of Baahar Bakery, closed down leaving an unpaid debt to the bakery of $580. This meant the bakery would never be able to collect $580 of income it had earned from credit sales to D J Menzies during the accounting year.

Based on his past experience Kamal Bahaar owner of Bahaar bakery always includes a provision for doubtful debts in the accounts of his bakery equal to 5% of the value of its trade receivables at the end of the accounting year. At 31 Dec in the current accounting year 2017 the value of the bakerys unsettled trade receivables is $10000.

Bart B: Following scenarios happened in year 2018. 8- (Recall number 6) Recall how on 25th July D J Menzies closed down leaving a debt of $580 to the bakery. (in year 2) on the 1 June 2018, the bakery receives a cheque for $580 from D J Menzies who has since re-opened his business. 9- (Recall number 7) Kamal wishes to maintain the provision for doubtful debts at 5% but the trade receivables of his business are now $15000. By 31 Dec 2018.

Bart C: Following scenarios happened in year 2019 10-Imagine in another year later at 31 Dec 2019 for Bahaar Bakery the trade receivables have risen to $18000 but Kamal intends to reduce his provision for doubtful debts to just 3% of trade receivables.