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JAMB Principles of Accounts 2007 Question 33

Question 33

Bad Debts and Provisions

Debtors ₦20 000
Provision for bad debts 10%
Provision for discount on debtors 5%.
Determine the amount provided for discount allowed on debtors.

  1. A.₦1 000
  2. B.₦3 000
  3. C.₦900
  4. D.₦1 500.
Show the answer and explanation

Answer: C (₦900)

Explanation

Debtors expected to pay = 20 000 − 2 000 (bad debts provision) = ₦18 000. Discount provision = 5% × 18 000 = ₦900.