Watson keeps a provision for bad and doubtful debts account. It is maintained at a level of 3% of his total outstanding trade debtors as at the end of the year. The balance on the provision account at 1 January 2008 was £9000. His trade debtors at 31 December 2008 amounted to £250 000.
What balance on his provision for bad and doubtful debts does he need to carry forward as at 31 December 2008? What amount does he need to write off to the profit and loss account for that year? And will it increase or decrease his profit?