Klix Limited's directors are reviewing the existing policy for calculating the provision for doubtful debts. They...

 

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Klix Limited's directors are reviewing the existing policy for calculating the provision for doubtful debts. They are considering applying a 4% rate to all debts as the basis for calculation. REQUIRED (d) (e) Calculate the effect of this change on the provision for doubtful debts. [2] Explain how this change would affect the company's income statement and statement of financial position. Explain why this change might be necessary. State three factors that the directors should consider when creating a provision for doubtful debts. (i) (ii) [2] [4] [3] Klix Limited's directors are reviewing the existing policy for calculating the provision for doubtful debts. They are considering applying a 4% rate to all debts as the basis for calculation. REQUIRED (d) (e) Calculate the effect of this change on the provision for doubtful debts. [2] Explain how this change would affect the company's income statement and statement of financial position. Explain why this change might be necessary. State three factors that the directors should consider when creating a provision for doubtful debts. (i) (ii) [2] [4] [3]

Answer rating: 100% (QA)

d i Pro vision for doubtful debts 4 x 100 000 4 000 4 x 100 000 100 000 4 000 4 4 000 is 4 of 100 00... View the full answer