In the ledger of Folake Enterprises, the Trade Debtors account showed a balance of ₦200,000 at the end of the financial year. An additional bad debt of ₦10,000 is to be written off before creating a provision for doubtful debts at 5% on the remaining debtors. What is the amount of the provision for doubtful debts to be deducted from trade debtors in the Balance Sheet?
- A₦10,000
- ₦9,500Cevap
- C₦9,000
- D₦19,000
Cevap
₦9,500
To determine the provision for doubtful debts, the additional bad debt of ₦10,000 is first deducted from the gross trade debtors balance of ₦200,000, leaving net debtors of ₦190,000. Applying the 5% provision rate to ₦190,000 yields ₦9,500, which is the required provision figure to be shown as a deduction from trade debtors in the Balance Sheet.
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Anahtar Kavram
Adjustments for Bad Debts and Provision for Doubtful Debts in Final Accounts