Day: March 10, 2020

The following information relates to a firm whose policy is to maintain a provision for bad and doubtful debts equal to 5% of its debtors.

• Balances at 1 January
• Debtors £10,000
• Provision for bad and doubtful debts £500
• Transactions for the period 1 January to 31 December
  • Credit sales £30,000
  • Cash sales £5,000
  • Receipts from credit customers £25,000
  • Bad debts written off £1,000

The balance on the firm’s debtors control account at 31 December is?

Select ONE answer:

1. £13,300
2. £14,000
3. £14,250
4. £15.000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

Answer 2:

Neither the provision for bad and doubtful debts or the cash sales are relevant to the debtors control account
.
Debtors
Dr Balance b/d £10,000
Dr Sales (Credit) £30,000
Dr Totals £40,000
Cr Bank £25,000
Cr Bad Debts £1,000
Cr Balance c/d £14,000
Cr Totals £40,000

 

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