The trial balance of a sole trader as at 31st December 2025 showed Trade Debtors of ₦120,0… — JAMB UTME

The trial balance of a sole trader as at 31st December 2025 showed Trade Debtors of $₦120,000$ and an existing Provision for Doubtful Debts of $₦4,000$ . At the year end, an additional bad debt of $₦5,000$ is to be written off, and the provision for doubtful debts is to be adjusted to $5\%$ of the remaining trade debtors. What amount will be charged to the Profit and Loss Account for the provision for doubtful debts for the year?

₦1,750Cevap
B
₦5,750
C
₦2,000
D
₦6,000

Cevap

₦1,750

Writing off additional bad debts of

₦5,000

reduces trade debtors to

₦115,000

. Applying the

5\%

provision rate gives a required closing provision of

₦5,750

. Since an existing provision of

₦4,000

is already present, only the increase of

₦1,750

(

₦5,750 - ₦4,000

) is debited to the Profit and Loss Account.

Adım Adım Çözüm

Deduct additional bad debts written off from gross trade debtors

₦120,000 - ₦5,000 = ₦115,000

Provision for doubtful debts must only be calculated on net recoverable debtors after writing off known bad debts.

Calculate the required closing provision for doubtful debts

5\% \times ₦115,000 = ₦5,750

The rate specified by the business policy must be applied to the revised trade debtors balance.

Determine the change in provision to be charged to the Profit and Loss Account

₦5,750 - ₦4,000 = ₦1,750

Only the net increase in provision is debited as an expense to the Profit and Loss Account.

Anahtar Kavram

Adjustments for bad debts and provision for doubtful debts

Tahmini Süre:1m 30s

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