Extended trial balance help needed! Unit 5!

abbiew Registered Posts: 10 Regular contributor ⭐ ? ⭐

Am trying to complete question 8.6 in the osbourne workbook for Unit 5 and am finding it hard to get the net profit right. I know it has something to do with the provision for bad debt relief figure but I can't see where i'm going wrong, can anyone help?

notes : provision for doubtful debts to be 5% of debtors.
debtors figure = £5000
Provision for bad debts already has a figure of 520 so i entered 270 in the credit side of the account in the adjustments column, this in turn meant the final figure on the credit side of the balance sheet column equals 250 (5000*5%).
In the provision for doubtful debts:adjustment account i entered 270 on the debit side in the adjustments column and then transferred this to the debit side of the profit and loss column of the same account. Is this correct?

Any advice would be greatly appreciated, thanks in advance!



  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?

    Your journal should in the adjustments column should look like: -

    Dr Provision for Doubtful Debts (Balance Sheet) £ 270
    Cr Bad & Doubtful Debts Expense (P&L) £ 270

    This would reduce your Doubtful Debts figure on balance sheet to £ 250, the credit entry would be shown as other income (Doubful Debts Recovered) on your Profit & Loss Account.
  • abbiew
    abbiew Registered Posts: 10 Regular contributor ⭐ ? ⭐
    Thanks so much, I had them the wrong way around in the adjustments column.. coffee is definately needed here,

    thanks again :o)
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