The following extract was taken from the trial balance and records of Kalu Traders as at 31st December 2025:
- Trade Debtors: ₦520,000
- Existing Provision for Doubtful Debts (as at 1st January 2025): ₦22,000
Additional adjustments required at year-end:
- Write off an additional bad debt of ₦20,000.
- Create a provision for doubtful debts equal to 5% of net trade debtors.
Match each accounting adjustment item on the left with its correct monetary value or accounting outcome on the right.
- Net Trade Debtors presented in the Statement of Financial Position (Balance Sheet)₦475,000
- Additional Bad Debts expense written off in the Profit and Loss Account₦20,000
- New closing balance of Provision for Doubtful Debts₦25,000
- Net increase in Provision for Doubtful Debts charged to the Profit and Loss Account₦3,000
Cevap
The correct pairings are: Net Trade Debtors in the Balance Sheet matches ₦475,000; Additional Bad Debts expense matches ₦20,000; New closing balance of Provision for Doubtful Debts matches ₦25,000; Net increase in Provision charged to Profit and Loss matches ₦3,000.
Each accounting adjustment item correctly pairs with its calculated financial value: Net Trade Debtors presented in the Balance Sheet equals ₦475,000 (₦500,000 adjusted debtors less ₦25,000 closing provision); Additional Bad Debts expense equals ₦20,000; New closing Provision for Doubtful Debts equals ₦25,000 (5% of ₦500,000); and the net increase in provision debited to the Profit and Loss Account equals ₦3,000 (₦25,000 minus ₦22,000).
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Anahtar Kavram
Accounting treatment for additional bad debts written off and provision for doubtful debts adjustments in sole trader final accounts.