Accounting 0452 · IGCSE · Irrecoverable debts and provision for doubtful debts

Irrecoverable debts and provision for doubtful debts — practice question

Nula’s financial year finishes on 31 December. She keeps a provision for doubtful debts equal to $5\%$ of trade receivables. On 1 January 2021, the provision stood at $800. By 31 December 2021, trade receivables were $13\,400$, and $600$ of this amount was considered irrecoverable. What amount was shown for the provision for doubtful debts on 1 January 2022?

  • A$600
  • B$640
  • C$660
  • D$670

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