Unit 5 help please - Provision for doubtful debts
schnappsgirl
Registered Posts: 2 New contributor 🐸
I am a bit confused with the provision for doubtful debts. Sorry for the silly question, but I would be really grateful for any advice.
At the end of the year, someone has made sales on credit of say £80k and they received £70k from these credit customers during the year. The owner then assessed his debtors and decided to make a general doubtful debt provision of 2% of his debtors. Would you say that the 2% is the 2% of the £80k or 2% of the £10k which is remaining on the debtors account?
Thanks
At the end of the year, someone has made sales on credit of say £80k and they received £70k from these credit customers during the year. The owner then assessed his debtors and decided to make a general doubtful debt provision of 2% of his debtors. Would you say that the 2% is the 2% of the £80k or 2% of the £10k which is remaining on the debtors account?
Thanks
0
Comments
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I think its the total sales, but now you've asked I'm not sure!!!0
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It is from the debtor total at the end of the year, the outstanding balance on the SLCA, which in the example quoted would be £10,000 i.e. £2000
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Thank you :-)0
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God I'm rubbish!! I must re read unit 5 this weekend!!0
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Don't worry Sarah, you've probably never made a general provision since Unit 5, I know I haven't and I took unit 5 7 years ago.0
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Same here, does anyone in the real world actually use them ?0
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Toffeemadblue wrote: »Same here, does anyone in the real world actually use them ?
Go and work for a firm of chartered accountants, or even a bookkeeping service provider or someone who is providing services to help self employed fill in thie tax returs, and it will soon come apparent whether it is being used in real world or not?0 -
I work in practice - does that not count?
As I said I've used specific provisions but not general ones0 -
We use them and I work in the accounts office of a manufacturing company, we use both specific and general ones, the auditors recommend it.0
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