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WAEC Financial Accounting 1996 Question 49

Question 49

Bad Debts and Provisions

Provision for bad debts: N1,000 Cr
Bad debts: N500 Dr
Debtors: N50,000 Dr
Additional bad debts to be written off: N500
New provision for bad debts to stand at 5% of debtors.
In the Balance Sheet, the net figure for debtors is

  1. A.N47,025
  2. B.N46,550
  3. C.N45,600
  4. D.N45,500
  5. E.N43,225.
Show the answer and explanation

Answer: A (N47,025)

Explanation

Debtors after writing off N500 = N49,500; provision 5% = N2,475; net debtors = 49,500 − 2,475 = N47,025.