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WAEC Financial Accounting 2009 Question 16

Question 16

Bad Debts and Provisions

The total debtors account of a trading concern is ₦13,000. Out of this 2% is irrecoverable, 5% of the balance is not likely to be collected. What is the provision for doubtful debts?

  1. A.₦910
  2. B.₦650
  3. C.₦637
  4. D.260
Show the answer and explanation

Answer: C (₦637)

Explanation

Bad debts = 2% × ₦13,000 = ₦260, leaving ₦12,740; provision = 5% × ₦12,740 = ₦637.