Home For AAT student members AQ 2016 Advanced Diploma in Accounting General discussion - Advanced level
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Specific allowance for doubtful debts recovered adjustment question

Can anyone please tell me whether the answer is £700 or £650 for this question?

You are working on the final accounts of a business with year end 31 Oct X4. The allowance for doubtful debts of £50 was relating to a specific debt provision which was paid during the year. At year end 31 Oct X4 you are required to allow for doubtful debts of 1% of remaining trade receivables. Would the figure in the adjustment columns be £700 or £650 as the £50 was recovered during the year? If the £50 had been paid wouldn't the £50 provision have been removed (debited)?

Extract from Extended Trial Balance

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