Dobey Dawson commenced business on 1 January 2001 and makes her accounts to 31 December every year. For the year ended 31 December 2001, Debtors amounted to $70,000, bad debts written off was $1,900. It was also found necessary to create a provision for doubtful debts of $3,500.
In 2002, debts amounting to $2,600 proved bad and were written off. H.
Haggy whose debt of $375 was written off as bad in 2001 settled her account in full on 31 October 2002. As at 31 December 2002 total debtors outstanding were $66,000. It was decided to bring the provision up to 5% of this figure on that date.
In 2003, $860 debts were written off during the year, and on 30 November another recovery of $550 was received from Denise Underwood in respect of debt written off in 2001. As at 31 December 2003, total debtors outstanding were $56,000. The provision for doubtful debts is to be maintained at 5% of this figure.
You are required to show for the years 2001, 2002, and 2003, the
(a)
(b)
(c)
(d)
(e)
Bad Debts Account.
Bad Debts Recovered Account.
Provision for Bad Debts Account.
Extract from the Profit and Loss Accounts.
Extract from the Balance Sheeta
