Irrecoverable debts and provision for doubtful debts

SEKOLAH HARAPAN BANGSA

ACADEMIC YEAR 2022/2023

Name : Richieco Saichi Score Teacher’s Signature Parent’s Signature

Subject : Accounting
Class : JC1 Science & Social
Day/ Date : 27/10/2023
Time :
Answer all questions.

1. Samuel is owed $5000 by Ardup. Ardup has become bankrupt on 1 December 2016 and is unable to pay
his debt. Samuel writes the debt off as bad.
a. Prepare the journal for Samuel when he writes off his trade receivable. [5]
2016 $ $
Dec 1 Irrecoverable debts 5000 -
Ardup - 5000

b. On 1 February 2017, Ardup has sufficient funds to enable him to pay Samuel and sent him a cheque for
$2,000.
Prepare the journal for Samuel when he acknowledged Ardup’s debt. [5]
2017 $ $
Feb 1 Ardup 5000 -
Irrecoverable debts recovered - 5000

Prepare the journal for Samuel when he banked Ardup’s cheque. [5]
2017 $ $
Feb 1 Bank 2000 -
Ardup - 2000

2. Job maintains a specific and general provision for doubtful debts. The general provision is based on 4% of
trade receivables after deducting doubtful debts.
At 31 Dec Total Doubtful Provision Total (e)
receivables debts (b) Specific (c) General (d) [e=c+d]
(a) [c=b] [d=(a-b)*4%]
$ $ $ $ $
2007 31 000 4500 4500 1060 5560
2008 37 000 5000 5000 1280 6280
2009 34 200 3700 3700 1220 4920
2010 35 640 4090 4090 1262 5352

Provision for doubtful debts account

$ $
Dec 31, 2007 Balance c/f 5560 Dec 31, 2007 Income statement 5560
Dec 31, 2008 Balance c/f 6280 Jan 1 2008 Balance b/f 5560
Dec 31, 2008 Income statement 720
6280 6280
Dec 31, 2009 Income statement 1360 Jan 1 2009 Balance b/f 6280
Dec 31, 2009 Balance c/f 4920
6280 6280
Dec 31, 2010 Balance c/f 5352 Jan 1 2010 Balance b/f 4920
Dec 31, 2010 Income statement 432
5352 5352
Jan 1 2011 Balance b/f 5352

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 Income statement at 31 Dec 2007
$ $
Dec 31, 2007 Provision for 5560
doubtful debts

Income statement at 31 Dec 2008

$ $
Dec 31, 2008 An increase of 720
provision for
doubtful debts

Income statement at 31 Dec 2009

$ $
Dec 31, 2009 A decrease of 1360
provision for
doubtful debts

3. Ali maintains a provision for doubtful debts in his books. It is made up a specific provision for doubtful
debts and a general provision equal to 5% of the remainder. The following information is extracted from
Ali’s books.
At 31 December Total trade receivables Doubtful debts (included in
total trade receivables)
$ $
2007 27 000 4000
2008 33 900 6400
2009 30 000 7500
2010 28 000 3000
2011 36 700 8300
Required:
a. Calculate the total provision for doubtful debts for each of the above years. [10]
At 31 Dec Total Doubtful Provision Total
receivables debts Specific General
$ $ $ $ $
2007 27 000 4000 4000 1150 5150
2008 33 900 6400 6400 1375 7775
2009 30 000 7500 7500 1125 8625
2010 28 000 3000 3000 1250 4250
2011 36 700 8300 8300 1420 9720

b. Prepare the provision for doubtful debts account for each of the years. (Assume that Ali had not made
a provision for doubtful debts before 31 December 2007. [10]

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 $ $
Dec 31, 2007 Balance c/d 5150 Dec 31, 2007 Income statement 5150
Dec 31, 2008 Balance c/d 7775 Jan 1, 2008 Balance b/d 5150
Dec 31, 2008 Income statement 2625
7775 7775
Dec 31, 2009 Balance c/d 8625 Jan 1, 2009 Balance b/d 7775
Dec 31, 2009 Income statement 850
8625 8625
Dec 31, 2010 Income statement 4375 Jan 1, 2010 Balance b/d 8625
Balance c/d 4250
8625 8625
Dec 31, 2011 Balance c/d 9720 Jan 1, 2011 Balance b/d 4250
Income statement 5470
9720 9720
Jan 1 2012 Balance b/d 9720

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