Test Index

WAEC Accounting 2010 Paper

Question : 15

Total: 44

$\text{1 / 1 / 06}$ Debtors	$\text{D 2,600}$
$\text{1 / 1 / 06}$ Provision for bad debts	$\text{D 60}$
$\text{31 / 12 / 06}$ New provision provision for bad debts	$5\%$ on debtors

What is the amount of the new provision for bad debts?

Solution:

Concept:

The new provision for bad debts is calculated by applying the given percentage to the closing debtors balance.

Explanation:

Debtors on

1/1/06

amount to

\mathrm{D}\,2{,}600

The required provision is

5\%

of debtors.

So, new provision

= 5\% \times 2{,}600

This equals

\frac{5}{100} \times 2{,}600

\frac{5}{100} \times 2{,}600 = 130

Therefore, the new provision for bad debts is

\mathrm{D}\,130

Answer:

\mathrm{D}\,130

Option A.

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