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  3. Busy Company is a retailer. Most of its sales are made on credit terms. The foll

Busy Company is a retailer. Most of its sales are made on credit terms. The foll

游客2025-06-21  5
问题 Busy Company is a retailer. Most of its sales are made on credit terms. The following information relates to the first 4 years.
Year 1 Year 2 Year 3 Year 4
＄ ＄ ＄ ＄
Trade Debtor as at 31 December 500,000 400,000 550,000 600,000
Bad debt written off for
the year ended 31 December - 30,000 10,000 29,000
Busy Company decides to set aside a provision for bad debts equivalent to 5% of trade debtors as at year end.
Required:
(a)Show how the provision for bad debts would be disclosed in the balance sheet as at 31 January Year 1 to Year 4.
(b)Calculate the bad debt expenses for the respective profit and loss account for each of the 4 years.
选项
答案 (a) Balance Sheet
Busy Company
Year 1 Year 2 Year 3 Year 4
＄ ＄ ＄ ＄
Current Assets
Trade Debtors 500,000 400,000 550,000 600,000
Less: Provision for Bad Debts (25,000) (20,000) (27,500) (30,000)
475,000 380,000 523,000 570,000
(b) Profit and Loss Account
Bad Debt Expenses
Year to 31 December Year 1 25,000
Year to 31 December Year 2
Balance of Bad Debt Provision ＄(25,000 - 30,000) 5,000 (Dr)
Bad Debt provision required ＄(400,000×5%) 20,000 (Cr)
25,000
Year to 31 December Year 3
Balance of Bad Debt Provision ＄(20,000 - 10,000) 10,000(Cr)
Bad Debt provision required ＄(550,000×5%) 27,500(Cr)
17,500
Year to 31 December Year 4
Balance of Bad Debt Provision ＄(27,500 - 29,000) 1,500(Dr)
Bad Debt provision required ＄(600,000×5%) 30,000(Cr)
31,500
解析
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