Test Index

WAEC Accounting 2010 Paper

Question : 16

Total: 44

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

Solution:

Concept:

Provision for bad debts is adjusted to the required percentage of debtors, and only the change is charged to the profit and loss account.

Explanation:

Required new provision is

5\%

of debtors.

5\% \times 2600 = \frac{5}{100} \times 2600 = 130

Existing provision on

1/1/06

60

Additional provision needed is

130 - 60 = 70

This

70

is the amount charged to the profit and loss account.

Answer:

70

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