‘Accounting A Level P-1 Worked Solutions Y 3. 50 Read and write Publications 3.1: Bad debts & bad debts recovery 1. 2 OIN 14/P13/016 A sole trader recovers a debt that had previously been writen off as irrecoverable. How is this accounted for in his income statement? A credit in the profit and loss account © debit in the profit and loss account B credit in the trading account D debit in the trading account OIN 13/P13/Q8, Mid O6/P1/04 Pino September 2008 a manufacturer's curent asses totalled $28 000. The next day only two Wransactons took place 1 Inventory bought for cash. The list price of $2 00¢ discount of 5%. Payment was made immediately. 2 Abad debt of $400 was written of | of current assets on 2 October 2005? ‘What was the total ee wes A $27680 10 was subject to a trade discount of 20% and a cash D 29600xting A Level P-t Worked Solutions Total of current ass Incre: Decrease in cash Decrease in trade Total of current as: set! Road and Wie Publications PU eed 5 on 30 September 10 x 80%) ($2 000 * 80% = 95%) receivables sets on 2 O ctober 3.1 posers s 28 000 1800 1520) (400) 7880don ett ca, pecoeng Ate 1 Weed SOM aay gg Panos 3.2: Provision for doubtful debts a ea a nian fad yee eceates f 16 00 and had rovsen or out ay Sethe movant be mantaned a ‘inex omaat sewn the same vate? es A $160 credit B $160 debit $800 credit D $800 debit 2. Ont terra1a9, om 13202, o1N 12IPtaa, Mid o2P1/a5, ON 88/P4/05 ‘Abusnes has vag receivable of $5200 at he yea ‘he esting provi for dou debs $3000, The provision for dau debt is to be maintained at of ade ecivabes hat sno aoc scsing te provion? aE x Tesaase by $2500 decrease by S400 5 ‘ecteas by $2500, decrease by $2000 © increase by $400 ‘decrease by $400 5 Ineeaso by $200 incroace by $400 8 Mme, {reated a provision fe doubt debts at 31 Decomber 2018. The provision was caleuated as a orentage ofthe ode reciabes a ach yer ees allows Trade Provision Tor doubtful debts (1) year ended restates ‘Si December 2016 “2500 = 10 vincn onl ESET ae 5. by noe pon BEIT GOS Besar Ba On VSGIRES GOTT WS GUAT AUSaedt 8 Sao ec Mneea oe ded the folonng internation, Fan SOOT HEAT Ta OTT frade recabioe a9 Decambar01? Te proviso Sous Goi so be RAST STET TR Ta RE z ‘hich ene are made a5 Becober 20177 stolen FOvIon aaa z Se00 creat set 8 $800 dei c $5750 reat D $3750 dt 5. Mu terpisias . How is decrease Inthe provision or doubt debts recorded? Tn ta income eatoment aaa gross poe fad to gros rot surat rom gross prot subvacod fom gross protOF following information is avaita eri = a 3p tor ooubt ca rere act wil ine proweon eee aT sibel wl ngs br te estas a fg dacrease by $6625 aaa yan be nce ste on terpt3/a12 Dieter en soy $5625 Siat financial statements showed the fon aT Vea ee crentasets ‘S21 urent bios Sete decded 0 Na Li a es were shown he har ee ae Ta TOGhS Voor aren Se aa aS z a0 8 1600 ee was c 20800 nee ae D 20800 oan aie nya 461111011, Mis 46IP13IQ44 wd 16 gember ne following fevormation was erat. GR TTeTT aBBATS aT HOT BOOK VETER current assets provision for doubtul debts current abilities Tass desided fo reduce The PON Tr Serge yn acs’ have on pron for the year Fe SEO. ad on nat sels? To dou oft othe yea x decrease 8 decrease c increase Lo | increase ins 2 provi Soot the start and S468 O00 + ‘yihich statements afe CO onic tetera’ accounts RAVE. ne i 2 Sa conse testes coe ese 3 §4600is deduct A ieands B1032: Prvisen fe Ey Accounting A Level Pt Wore Solions pant and Ws Poneto doubt debts equal lo 10% of rade receivables The provision at 31 Rarch 2013 was $8200. ‘The ttade eivablas afer the provision on 31 March 2014 were $55 800. Whats the change in provision over the 12 months? A $2100 decrease 8 $210Dincrase —C_—$2700decrease ont January 2073, At 31 December 2014 the following information is avaiable, st ty D s2700increace (s) (8) “trade recewables 50 000 400 000, ‘increase in provision for doubWul debts in income statement 4000 2.000 © | brewsin for doubt debts azzut income statement =a ‘On 31 December 2013 John decides to Increase the rate Of provision to SY 720. debit of $80 for the change in the provision. Income stalement shows a ina the value of dns total ade receivables on 31 December 20137 A 812800 B $1400 © sien 3 oon 0 ‘Att March 2006 ine prowsion for daub debs wos S850, ‘A131 Moreh 2009 tne Wado recevables afr the poison fr doublets wore $17 499 20007 AL 31 March 2000 reass in ine provson for doubt debts forthe year ended 3} 20 A $45 eB $50 c $280 DeeAk apa Saion B Provision for doubt do Existing provision for douse ed ($y Increase in provision (Ub debe 18000 x 54) Increase in provision f¢ 2 r "rovision for ite : lon fc ‘Goubtiul debts ‘$100, tng vio or cee 5200 fe Decrease in provision (will result in Ncrease in proft for the : 4 Ctaterermttineiasey Provision for doubtful debts required : : Existing provision for doubtil debs Ser ae om) ul debts 32 te ths Decrease in provision eis ($52 600 » 10%) inh cr Decrease in provision for a doubt debt rues te toning ey ("Prison fr doubt dens Sieh cr Income statement ise 8 $ Provision for doubtful debts requires ($75 000 5%) a0 Existing provision for doubtul debts 230 Increase in provision fa lob involves the folowing enty Increase in rosin fr a oui dino Dr Income statem , 2 Cr Provision for doubt detis 5 5 SO : 1 Se 1508 d 15 required (593 & Provision for doubt de Oe tng provison for Sou 88 in rd Cee Zz tease pat et react SS res se ete wa rte bt rote om end eaten foi rd 7 Seesieetree an a provision 18 ‘ on a reductio was based on 8 TO hegre hs Bote toate’ accounts. Hem neepoail ‘Sattr Scee ep bo 0 +s tobe teed nt trom curent32 Ancwes a Set esd ang wt Pusicaton s 6200 8300 29 Provision on 31 Dec 2013 + Current year increase $4000) +” $2000 55.000 Provision (8) 38.000 $5000 100005 * 100 x . ow : ee recent : = (S720 500), : $800 317109 s ‘= seve ets resureson 3 March 2009 ($1710) a 35% os forward 31 March 2008, 3 insome sterner, 5 2_—— 1: Bad & doubtful dope, ‘heaton, Ss on 19taia9 he olin ore WaS A decrease in th vise ae : 20 Whats the amount ate w™sioans 3a su 190012107, OM tarPHarae tho prowson for doubt da Trade rocewabos t 31 Doce The provision for doubtful debts was snp, oe" Men oft ‘Whit en For doubt debts was tee A cred §3250 ed intense wm lente nce stunt rte yer ee 3 aco Gdbtssas) Debt en so nN 181012109, mis 4371303, 1 o4Ptiag ‘company has tha lowing blames, Tae ocaaog aT Deca arB06E aa Towson or doubt debt a Jaa TT Teor ‘During the year ended 31 December 2003 bad debs S20 S00 ware wien cH The Company BroaeS fe ‘of trade receivables at each year-end m= \What isthe doublful debts expense forthe year ended 31 December 20037 A $3445 B 4470 © $5245, © $6270 1. O1N 18/P 11108, md 14112103 incite core ie ae cera ei om ib rai ae lnc ne tn vena eos eae oe 8 Tate one ocd tr cece a yunt is not included in a trial balance. 0 a sence on te pov dx eis acta es E company atv vie ect lg HE, oxi A Jann gg 00 ana wting sae an es but ns sete Teco cus Ont March 210 an ae ‘ended 31 Decomber 201 (jplirecoverable 3nd 2 el ce yee vr et Thapar mene sen reece) was $19 600, OU uy s71e14109 usin for due Sa we art tne yoo tne wovseL Solan a Boo were witan otha 072 fy on What wos tne na 2 ; A sarod decrease @f OWN s71P13109 * $5260 4040 a (Ger irocoveraia debts o $1258 ons ite putea emutny arent svoses seins ett ot 31 May 2017 een rial balance of a business = 7 I gs an excl rom te = 3250 Tae ecanatles rovisen for dott bls Zr casiorer ving $5000 Pi 2017? financial statements ot 31 Ma Fr age recaabes peaseoelaes ee tera ffanca postion waco se Yeurent assets) (eres) s ae 5650 x od Coa é 3360 opense om ¢ Siconense a ° 5 100 eperse civables were $60 320 which ictus 8 MAR ¢7IP12108 ‘Atal balance showed a prouson for doubtful debs as $1360, Trader '8 debt of $500 which wat recoverable ‘Which enty wes required Inthe provision fo doubul debi account I the closing Balance was to be Si of 1166 debit trade recovables? A Sitéteredt —Bsttatdenn = St16Scret =D 8. om 16PIt08 {A company’ tl balanc showed rade receives of $14 G00 and an existhg provision for doubtful debs of ‘was discovered thatthe rade receivates included an recoverable deb of $500, A contra enty of $400 was also tobe made, ‘The provision for doubtful dobs is tobe msinisind at 5 of rade receivables \inich amount for doubt debts was charged the come Stlement A 8215 8 8235 © S70 © se85 obit S| ere ‘Wade recehabes creat] revision for daub dabis 35600 . ‘A 30 June, was desided To wile OW @ bad GEOL OTT GOV ands Ha = 1100 ike & rovsion for doubt debt fa debts equal to 28; or wade receivabes. Wha wa fetes inte name stamens fo the yar ened 30 8° ered 30 June? A $660 B st 120 © s2080 Cee 11. OM tsP21105 a ‘business had a draft os fr ho year of $4860. Furteraistments wee SLO se of of 165 for bad debe ‘requied, BS conf 500 epson du ts A 24 ‘nat was tho loss forthe year ater ese adjustments? A $4105, 8 sesis © savas oO Jone 15:61 1013, wis oa Alte end ofa final pero, business haste following Total Wade rocowabies balances Bad abt not yet writen of Provision for doubt debis Bought Tanwar ‘ha should Be business do fi wishes to maine A decrease the exstng provsion bysso CG increase the existing provision by EBD racer? pile exiting prowsion oy 1 ‘stg provision by 971Rad and wie Puy i 1SP19/04, MY 10112709 1 ineas provides the followin !nformaton, : 32: Pevsen de Scena ros (¢_ The value of bed debts incurred has denen og myarniate = eas eased, Tai debt. The provision for doubtiul dette af he vee Wintemeret ‘amount of ade receivables a 31 Decembor2013? = oe 43)P 11105, OIN O1/P1102 Fagen eR a a rors ivabton at 31 Decor 200 fe weg bd cet 50, Traae ocr vae$ aatemert for ba an Sula forte yar ened 31 Deconbr (including bad debts written off $30) eeense ae inate he pereenage provision Ray a To oul as aH DeEEMBR 20007 A 33% 8 are aes eo CO NBs gay rn gem a ete ar Bogan of he yt COnety Yara ae en ten +e rece mH # A eg rosin is $2 200, During te yea" 6 {debt wtten off many years 292; eb wen St amotunt charged tote name sas 8 A $1500 $2 500 mentor bad and doubt debs? $2000 $3000 smi en ne sa Se — ani pos ee aa vores atari snows ba iar eemientaeneienm , ge MG A 76000 Bs ee psn cs ot 18 AGO rea of 8 ren 0, nee en Rr eae of vase obs Cae = 88 ‘wade Fas balance onthe Trade rece e a of 5480. pos et ganas? @ a soparate 52 ssn ‘The business pte a sone Be PE gu cat st ‘n ash 8 ‘What isthe ent A $836 debit Son for dou 88 eatery ante ‘este 1D esutin 9 Cem dese Ce 7 re receivable ‘Which em woul rest jon or oR gets DMP of A aninerease in he POW” ld Ba reduetion in the provision ¢FIST Ga GEE THT TOAA THD $12 500)“ 5H) Encling provision for Soult bls Ineeaaen rion in provision fora dubia deb velo the following erty. provision fora doubt aa or icome statement CCr—_Praision or doubtful debts $32.50 Provan or doubts dbs ried ($125 400 x 5) Proveln or dobia dete dans 2002 Data epane the yoo ae e. ad cet (67 750» 60%) Dezrssen provision for doubt et (645 00» 54) ~ (632800 « Total expense in the income statement for bad and doubtful debis om ae Bad debs weiter of! ‘Taalbod and docu bt expences Us hance ee ‘rayon. 7 Existing provision o doubt debe Increase m provision (be rededin proven acoun . cen br it at nant 102) 005 gO? Eig rovcn toe = oom $ 10. 8 > e 470 Oo & 25 Bad debts @F os “P5iriponse inte income solomon obo are dil dlttul debts required {(510 620 = é Provision fr doula bts baeught frac oe a provision 2 swe ke = nes + Prono gh) = roan Preasin Provision 0%) ee aeracsinbies 2013 1 ise = ve 203 1726 &% ya change in provision + go np 1 8" option) 4c " . ore aE : _ - g510~ $15000 «109 2 . = Ee & (aoe coment 3 ra 750 | Gas cette aco wt oan #0) ae oat Balance 09 (SUED eePascoe, Dae 2" Wrens Sse 49. a Pees ern Vite Pucications Provision for doubt deta required [(962 200 ~ $420)7 54) Kiting provision for doubttul detis A 1 OQNEION increase in provision for @ doubtful debt involves the following entry. Dr ingore staternent cr Provision for doubiful debts 2 2.3: hrswers Sesion 3436 2.600 $836 $836tng A Level Pl Woke Soltons Read an te Pablenne 3.4: Multiple topics 4. OIN 19111107, OM t4IP 11104 ‘Tne folowing information is avaiable for a business, Trade reoewables at January provision for doubtful debs att January {otal eredit sales for January cash from customers after 4% settlement discount ‘provision for doubtful dabis of 27 i to be made. \What adjustment is requied in the income statement? A. $570 credit B ss7odebit © seo crest 2, OIN 13IP12I021 'R business is reviewing crit mis forts custome ‘hat would result in a custom's credit lint being resuces? ‘A. Cash discounts are always taken bythe customs 1B Sales have increased to that customer ©The customer alvays pays thei debt on time 1D The customer has lst a major contract. 3. Mid 43012109 Mie a most ikely 1 use an age analysis of d8bl0rs? A. cashier (© sales ladger supersser B credit controller D_ sales menager D seenastt 4. MPs ‘What isthe main use of a computers’ (A. aid debt collection procedures 'B match sales Invoices against orders 4 age aay tne recites? ‘reconcile sales ledger balances: Bmw cedheous itd‘ TT ‘Yb Seton, us 4 hes ty Soh a tn Putleens CN es 1 Trad rocolvablos Recount + Kalan: $ 4 " (8009 | yer eon S224 000-8 13.500 pico attonoel 22400 Crodi soles 827 000 | Gash from customers “24 000 tata a0) 1250) siaLia uuu thw roxio 2% of thie Sigur $1080 ~ tha ening provision of $1800 lading fo Hho ane of xed 40, FEntoning reason tor doit db $1800 How pein for doubt bnb (852500 29) 1080 Doce in pin to be cod in cee statorant 40, 20 {uotion vhra tho cot limit of customors should have boon rouced The Tho quoi mao ining atv, wich was ho custo il lose hkoly to pay Hor account on time or af al, This, therofore innplication tora that th should bis sorathing 10 46 ah