Provision For Bad Debt Write Off

System

Hello can any one help me regarding provision for bad debt write off :-

Debtors 5,000
Bad DEbt Write Off 100
Provision for Bad Debt Write Off 520

Iam being asked to calculatea provision for bad debt write of at 5% , here my calculation (which is incorrect)

5000-100 = 4900 x 5% = 245

However the answer Iam meant to get is £270 ???

Totally confused can any one help me before I lose my mind
:?

System

Re:Provision For Bad Debt Write Off

baddebts account is just the balance in the trial balance. Therefore we do not deduct from the debtors because it is not a double entry adjustment.

Therefore we calculate the new provision for bad debts account which appears in the balancesheet which is : 5% of 5000 = 250

Old Provision for bad debts was 520. Therefore there is a decrase of bad debts of 520 - 250 = 270
which is credited to the Profit & Loss Account.

System

Re:Provision For Bad Debt Write Off

Many thanks for your help Roy, it all makes sense now, cheers Janine