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JAMB Principles of Accounts 2010 Question 16

Question 16

Bad Debts and Provisions

Sundry debtor ₦20,000
Provision for bad debts ₦500
Provision for bad debt at 4% of sundry debtors.
Determine the provision for bad debts to profit and loss account.

  1. A.₦500
  2. B.₦820
  3. C.₦1 300
  4. D.₦300
Show the answer and explanation

Answer: D (₦300)

Explanation

New provision = 4% × 20 000 = ₦800. Only the increase over the old ₦500, i.e. ₦300, is charged to profit and loss.