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Difficulty: EasyBad Debts Written Off and Bad Debts Recovered

At 31st December 2025, Chukwu Limited had a total trade debtors balance of ₦120,000. During the year, bad debts amounting to ₦8,000 were written off, and a debt of ₦3,000 previously written off was recovered in cash. What is the net amount of trade debtors (in ₦) to be presented in the Statement of Financial Position?

Answer: 112000 ₦

Answer

112,000
The net trade debtors figure in the Statement of Financial Position is calculated by subtracting bad debts written off (₦8,000) from the gross trade debtors balance (₦120,000), giving ₦112,000. Bad debts recovered (₦3,000) are recorded as income in the Profit and Loss Account and do not affect the closing trade debtors balance.

Step-by-Step Solution

1
Identify initial trade debtors balance
Initial trade debtors = ₦120,000
This is the unadjusted trade debtors balance before accounting for bad debts written off.
2
Deduct bad debts written off
Net trade debtors = ₦120,000 - ₦8,000 = ₦112,000
Bad debts written off represent debts that are irrecoverable and must be removed from total trade receivables.
3
Analyze the impact of bad debts recovered
Net trade debtors remains ₦112,000
Bad debts recovered (₦3,000) are credited to income in the Profit and Loss Account and debited to cash/bank, so they have no effect on closing trade debtors.

Key Concept

Calculation of net trade debtors after bad debts written off and recovered
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Topics

Bad Debts Written Off and Bad Debts Recovered

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