Exam code: 0452 & 0985
State two reasons why a business might maintain a provision for doubtful debts.
1 ................................................................................................................................
2................................................................................................................................
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5 marksStalla is a sole trader who sells on credit. She maintains a provision for doubtful debts at 4% of trade receivables.
Stalla’s trade receivables were:
$ | |
At 31 December 2021 | 75 000 |
At 31 December 2022 | 77 000 |
REQUIRED
Prepare Stalla’s provision for doubtful debts account for the year ended 31 December 2022. Balance the account at 31 December 2022 and bring down the balance at 1 January 2023.
Stalla
Provision for doubtful debts account
Date | Details | $ | Date | Details | $ |
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4 marksLogan is a trader who sells goods on credit. His year end is 30 September. Logan has provided the following information.
$ | |
At 1 October 2022 | |
Trade receivables | 7 500 |
1 June 2023 | 2 490 |
At 30 September 2023 | |
Trade receivables | 8 700 |
Irrecoverable debts to be written off | 325 |
The provision for doubtful debts is to be maintained at 4% of trade receivables.
REQUIRED
Prepare the provision for doubtful debts account for the year ended 30 September 2023. Balance the account at 30 September 2023 and bring down the balance at 1 October 2023.
Logan
Provision for doubtful debts account
Date | Details | $ | Date | Details | $ |
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