Question
Question 2 Balance Day Adjustments
Using the following information, prepare journal entry for provision for doubtful debts for the year ending 31 December 2019.
Trade debtors 31.12.2019 K 52 000
Provision for doubtful debts 1.1.2019 2 300
Provision for the year 5%
Using the following information, prepare journal entry for provision for doubtful debts for the year ending 31 December 2019.
Trade debtors 31.12.2019 K 52 000
Provision for doubtful debts 1.1.2019 2 300
Provision for the year 5%
Answers
GPT 3.5
Provision for doubtful debts for the year ending 31 December 2019:
Provision for doubtful debts (Income Statement) 2,600
Provision for doubtful debts (Balance Sheet) 2,600
Calculation:
Provision for the year = Trade debtors 31.12.2019 * 5%
Provision for the year = K52,000 * 5% = K2,600
This entry increases the provision for doubtful debts on the balance sheet to K2,600 to account for potential bad debts on the trade debtors.
Provision for doubtful debts (Income Statement) 2,600
Provision for doubtful debts (Balance Sheet) 2,600
Calculation:
Provision for the year = Trade debtors 31.12.2019 * 5%
Provision for the year = K52,000 * 5% = K2,600
This entry increases the provision for doubtful debts on the balance sheet to K2,600 to account for potential bad debts on the trade debtors.