Bad Debts and provision for bad debts

Beautiful_bobo

Please can someone help me. I am really struggling with this.

In Osborne tutorial 8.4 we have:-

Debtors balances at 31 December 2005, before writing off bad debts, 105,200
Bad debts written off 31 December 2005, 1800
2.5% provision for doubtful debts 31 December 2005

Then we have:-

Debtors balances at 31 December 2006, before writing off bad debts, 115,600
Bad debts written off 31 December 2006, 2400
2.5% provision for doubtful debts 31 December 2006

Then we have:-

Debtors balances at 31 December 2007, before writing off bad debts, 110,200
Bad debts written off 31 December 2007, 1400
2.5% provision for doubtful debts 31 December 2007.

We have to do T-Accounts for these and put the figures in p&L and Balance sheet. I have not got a clue. So advise or help would be appreciated as I have had a few sleepless nights worrying about this.

Thanks for all your help.

AK002

2005:

You will have;

Dr P&L Bad debts 1800
Cr BS SLCA 1800

Dr P&L Bad debts (can't remember if you make a new code for provision on the P&L) 2585
Cr BS Provision for doubtful debts BS 2585.

2006:

Dr P&L Bad debts 2400
Cr BS SLCA 2400

Dr P&L Bad debts 245
Cr BS Provision for bad debts 245

(Balance in Provisions account is now Cr 2830 (2.5% of 115600-2400)

2007:

Dr P&L Bad debts 1400
Cr BS SLCA 1400

Dr BS Provision for bad/doubtful debts 110
Cr P&L Bad debts 110

(Balance in Provisions account is now Cr 2720 (2.5% of 110200-1400)

Basically you write of the specific bad debts before you calculate the provision %age.

Hope this helps, kinda hard to explain on the computer..

Beautiful_bobo

Bad Debt and provision for bad debt

Thank you so much. If you were not so far away I would be up there to give you a hug.

AK002

LOL! I hope that all made sense !

steveJ

I was struggling with that bit.
Have a look for Frank Woods business accounting 1+2 books on ebay or amazon. I paid around £9 for both of mine.
These are really great and proving really helpful.