here is one question from section A
Mina Kaur's financial year ends on 31 march. she has provided
the following information relating to her debtors for the years
2006, 2007 and 2008.
31 march 2006 31 march
2007 31 march 2008
sales ledger
balances $12
600
$16
410
$11 240
bad debts to
be $
700 $810
$ 540
written off
On 31 march 2006, it was decided to create a provision for
doubtful debts at 4% of the outstanding debtors. This is to be
maintained at 4% of the debtors at the end of the year.
REQUIRED
(a) prepare the provision for doubtful debts
account for each of the years ended 31 march 2006, 2007 and 2008.
[5]
(b) state the amount of the net debtors that
would appear in the balance sheet at 31 march 2006, 2007 and 2008
[3]
(c) explain two reasons why
mina kaur should calculate an annual provision for doubtful debts.
[4]
(d) state the effect creating a provision for
doubtful debts will have on mina kaur's cash balance.
[2]
Total : 14 marks.
