1
J Blane commenced business on 1 January 2006 and prepares her financial statements to
31 December every year. For the year ended 31 December 2006, bad debts written-off amounted
to £1,400. It was also found necessary to create a provision for doubtful debts of £2,600.
In 2007, debts amounting to £2,200 proved bad and were written-off. J Sweeny, whose debt of
£210 was written off as bad in 2006, settled her account in full on 30 November 2007. As at
31 December 2007 total debts outstanding were £92,000. It was decided to bring the provision up
to 4% of this figure on that date.
In 2008, £3,800 debts were written-off during the year, and another recovery of £320 was made
in respect of debts written-off in 2006. As at 31 December 2008, total debts outstanding were
£72,000. The provision for doubtful debts is to be increased to 5% of this figure.
You are required to
show for the years 2006, 2007 and 2008, the
(a) Bad debts account.
(b) Bad debts recovered account.
(c) Provision for doubtful debts account.
(d) Extract from the profit and loss account statement.