Chapter 8 activity 4 Provsion for bad debts
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Does anyone have the answers to Chapter 8 Activity 4
Unit 5, Chapter 8
Activity 4
At 31 December 20X5, Mr Green and total debtors of £12000 and had provided against 2 specific debts of £150 each. The debtors concerned were X Ltd and A & Co
in 20X6 Mr Green writes off as bed the debt from X Ltd of £150 which has already been provided for. He also writes off as bad a debt from PQ & Co of £50 which has not been provided for.
He also decides to provide against a further debt from Mr Z of £200 and to keep the provision against the debt from A & Co
Show the ledger entries required to record the above using the individual debtors accounts.
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Comments
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Re:Chapter 8 activity 4 Provsion for bad debts
This is driving me mad!!
I know that the balance on the provision account should be £350.00. (150 A & co + 200 mr Z) Having trouble understanding the bad debt account. The £150 bad debt from X ltd had already been accounted for in previous period so should this not go through the bad debt account. :?
Have you worked it out yet?0 -
Re:Chapter 8 activity 4 Provsion for bad debts
Hello
As for the bad debt a/c because it has been provided for you need to write it out of the provision first of all by
dr bad debt
cr prov for doubtful debt
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Re:Chapter 8 activity 4 Provsion for bad debts
Is the ansswer for the following balances 31st December 20x6 are Debtors 11800, Provision for bad debts 350 and Bad debts expense 250?0 -
Re:Chapter 8 activity 4 Provsion for bad debts
I would have done it this way And been WRONG:-
Bad Debts
Debit Debtors (BS) 150+50 = £200
Credit Bad Debts (P&L) £200
Provision for Doubtful debts
Opening balance £300
less x Ltd £150 being written off
plus new debt Mr Z £200
closing balance of provision now £350
Thereofore provision has increased by £50
Credit provision for doubtful debts (BSheet) £50
Debit provision for doubtful debts (adjustment)(P&L) £50
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Re:Chapter 8 activity 4 Provsion for bad debts
Hi Guys!
If a bad debt has already provided for and then is benig decided to w/off it would have no effect on the the P&L as it has already provided for previously and hence been charged to P&L prior. so the entry would be :
Dr provsion acc £150
Cr SLCA acc £150
Dr Bad debt £50
Cr SLCA £50
the balance on the provision acc. has to be £350;hence the balancing fig is £200 increas in provision.
Dr Bad deb £200
Cr provision £200
Dr bad debt £250
Cr P &L £250
Shell 73 have the right balances, and the increase in the provison is £200 not £50.
I hope i have not caused any confusion, cheers
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