You are given the balances on 1 January 2010 as stated on the left and further information of transactions in 2010 as stated on the right:

At the end of year 2010 the allowance for doubtful debts is required to be 5% of trade receivables, after making a specific allowance for a debt of £200 from a customer who went bankrupt. Transactions in 2011 are stated on the right.

Footnotes:

(a) An amount due from a customer set off from what is owed to the same party reported as a supplier.

(b) A reduction of amount receivable from a customer as an incentive to obtain early payment.

At the end of 2010 the allowance for doubtful debts is still required to be 5% of trade receivables.

Required:

Set out the Trade receivables account and the Allowance for doubtful debts account for the years ended 31 December 2010 and 2011.

Transcribed Image Text:

Trade receivables Allowance for doubtful debts £10,000 £400