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Zorluk: OrtaBad Debts Written Off and Bad Debts Recovered

Tayo Traders had a trade debtors balance of ₦450,000\text{₦}450,000 before year-end adjustments for the financial year ended 31st December 2024. At the end of the year, additional unrecorded bad debts of ₦15,000\text{₦}15,000 were identified to be written off. During the same year, cash of ₦10,000\text{₦}10,000 was received from a customer whose debt of ₦10,000\text{₦}10,000 had been written off in 2022. What is the net trade debtors balance to be shown in the Statement of Financial Position as at 31st December 2024?

Cevap: 435000 ₦

Cevap

The net trade debtors balance to be shown in the Statement of Financial Position at 31st December 2024 is ₦435,000\text{₦}435,000.
To calculate the net trade debtors figure for the Statement of Financial Position, only additional bad debts written off at year-end (₦15,000\text{₦}15,000) are deducted from the unadjusted trade debtors balance of ₦450,000\text{₦}450,000, resulting in ₦435,000\text{₦}435,000. Bad debts recovered (₦10,000\text{₦}10,000) are recognized as revenue in the Income Statement and received in cash, having no effect on closing trade debtors.

Adım Adım Çözüm

1
Determine the unadjusted trade debtors balance
Unadjusted Trade Debtors = ₦450,000\text{₦}450,000
This represents the recorded receivables prior to writing off year-end unrecorded bad debts.
2
Subtract additional bad debts written off at year-end
Adjusted Trade Debtors = ₦450,000−₦15,000=₦435,000\text{₦}450,000 - \text{₦}15,000 = \text{₦}435,000
Bad debts written off represent irrecoverable amounts and must be deducted directly from trade debtors.
3
Evaluate the treatment of bad debts recovered
Effect on Trade Debtors = ₦0\text{₦}0
Bad debts recovered during the year are recorded by debiting Cash/Bank and crediting Bad Debts Recovered (an income account). Because the original personal account of the debtor was already cleared when written off in a previous period, recovery does not alter the closing trade debtors balance.

Anahtar Kavram

Treatment of Bad Debts Written Off and Bad Debts Recovered on the Statement of Financial Position
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Bad Debts Written Off and Bad Debts Recovered

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