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WAEC Financial Accounting 2003 Question 41

Question 41

Bad Debts and Provisions

Debtors value as at 1st January 2000 was N40,000. Bad debts written off during the year was N5,000. Provision for bad debt was 5%.
The amount debited to Profit and Loss Account as provision for the year was

  1. A.N5,000
  2. B.N2,250
  3. C.N2,000
  4. D.N1,750.
Show the answer and explanation

Answer: D (N1,750.)

Explanation

5% × (40,000 − 5,000) = N1,750.