Beech is a retailer. Most of his sales are made on credit terms. The following information relates
Question:
Beech is a retailer. Most of his sales are made on credit terms. The following information relates to the first four years that he has been in business:
The trade is one that experiences a high level of bad debts. Accordingly, Beech decides to set aside a provision for bad and doubtful debts equivalent to 10 per cent of trade debtors as at the end of the year.
Required:
(a) Show how the provision for bad and doubtful debts would be disclosed in the respective balance sheets as at 31 January 2010, 2011, 2012 and 2013.
(b) Calculate the increase/decrease in provision for bad and doubtful debts transferred to the respective profit and loss accounts for each of the fouryears.
Transcribed Image Text:
2010 2011 2012 2013 Trade debtors as at 31 January: £60 000 £55 000 £65 000 £70000
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a BEECH Balance sheet extracts at 2010 2011 2012 2013 Current assets Tra...View the full answer
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