Bad debt and Allowance for Doubtful debt

Exercise
1. During the year to 31 December 20X6,the following debts are found to be bad and are
written off on the dates shown:

9 March

T Wright, 86

30 May

S OConnor, 111

25 June

C Smith, 75

10 October

S Proctor, 39

Show the bad debts account and the effect on the profit and loss account for the year ended
31 December 20X6.
2. The following are the total figures for debtors at the end of each financial year. The
provision for doubtful debts is to be maintained at 4% of debtors at the year-end.

Year ended 31 December

Value of debtors ()

20X1

12,000

20X2

15,000

20X3

14,000

Assuming no provision had previously existed you are required to:

1. Construct the provision for doubtful debts account for 20X1, 2 and 3.
2. Show the relevant entries on the profit and loss account for the year ended 31
December 20X1, 2 and 3.
3. Show the debtors on balance sheet extracts as at 31 December 20X1, 2 and 3.

3. On 1 July 20X6 there was a balance of 600 in the Provision for Doubtful Debts Account
and it was decided to maintain the provision at 5% of the debtors at each year-end. The
debtors at 30 June for the next three years were:

20X7

15,000

20X8

10,000

20X9

10,000

Show the provision for doubtful debts account for the period 1.7.X6 to 30.6.X9
4. As at 1 April 20X8 we were owed 650 from Paul Evans. On 26 July Evans was declared
bankrupt. A payment of 35p in the was received in full settlement. The remaining balance
was written off as a bad debt.
Write up the account of Evans, as it would appear in the Sales Ledger
5. In a new business during the year ended 31 December 20X5 the following debts are found
to be bad and are written off on the date shown:
28 February
27 August
17 September

N Johnston
M Johnson
D Scaife

87
32
112

Show the bad debts account for the year ended 31 December 20X5
6. The debtors figures below have been extracted from the end of year final accounts of Hope
Ltd, for a four year period:

20X1

4,000

20X2

6,000

20X3

6,000

20X4

3,000

The directors have decided to create a provision for doubtful debts equal to 4% of
outstanding debtors at the year-end.
Construct the provision for doubtful debts account for this period of time assuming no prior
provision existed in the books of Hope Ltd.