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Bad Debts W3

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14 views1 page

Bad Debts W3

Uploaded by

abdulmaster2020
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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QUESTION:1 You are preparing to train a new number of staff on the topic of bad and doubtful debt.

You have the following data

Aged analysis of Account Receivables;

0-30 days $42,700

31-60 days $18,725

Over 60 days $4,836

Total Receivables $66,261

These balances include a balance of $900 which has been outstanding for 8 months. The customer
has recently ceased trading and the debt will not be recovered.

The policy is to be provided for doubtful debts on the following basis:

0-30 days 1% of balances

30-60 days 25% of balances

Over 60 days 75% of balances

Provision for doubtful debts brought forward $8,200 on 1 Jan 2024.

Prepare provision for doubtful debts account for 2024

Question 2

Squash Ltd has been making a provision for doubtful debts at the rate of 5% of account receivables
for the past five years. On 1 January 2012 there was a balance of Rs725 in the Provision for Doubtful
Debts Account.

During the year ended 31 December 2012 bad debts written off amounted to Rs625.

On 31 December 2012 the remaining account receivables amounted to Rs9,700 and the company
decides to increase the provision to 7% of account receivables due to market conditions.

Required

Prepare the following accounts for the year ended 31 December 2012.

(i) Bad Debts Account

(ii) Provision for Doubtful Debts Account

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