JAMB Accounts Principles of Accounts 2010 Paper

Concept:The provision for bad debts to the profit and loss account is the increase in the provision from the old amount to the new required amount.Explanation:Calculate the new required provision:$4\% \times 20000 = 0.04 \times 20000 = 800$The existing provision was $500$.The additional amount needed is:$800 - 500 = 300$This extra $300$ is charged to the profit and loss account as an expense.Answer:$\mathrm{N}300$ (Option D).