1 A business, which started trading on 1 January 2007, adjusted its doubtful debt provision at the end of each year on a percentage basis, but each year the percentage rate is adjusted in accordance...

1

A business, which started trading on 1 January 2007, adjusted its doubtful debt provision

at the end of each year on a percentage basis, but each year the percentage rate is adjusted in

accordance with the current ‘economic climate’. The following details are available for the three

years ended 31 December 2007, 2008 and 2009.

You are required to show:

(a) Bad debts accounts for each of the three years.

(b) Provision for doubtful debts accounts for each of the three years.

(c) Balance sheet extracts as at 31 December 2007, 2008 and 2009.