Accounting 0452 · IGCSE · Irrecoverable debts and provision for doubtful debts
Irrecoverable debts and provision for doubtful debts — practice question
Ramla has already worked out her draft profit for the year ended 28 February 2023, but her ledger accounts still need adjustments for these items; 1 Ramla is to write off $99 owed by Mai as irrecoverable; 2 fixtures and fittings costing $875 were bought on credit from Padma; 3 a loan repayment of $500 was wrongly entered as loan interest; 4 rent of $350 paid had been entered as $530; 5 drawings of $120 had been posted to the wages account.
(a)[10]
Prepare the journal entries for items 1-5. Narratives are not needed.
(b)[6]
Complete the table by entering the amount for each adjustment needed to calculate Ramla’s adjusted profit. If an item has no impact on profit, enter zero (0) in the ‘no effect on profit’ box.
(c(i))[2]
Explain how the journal for item 1 follows the prudence principle.
(c(ii))[2]
Explain how the journal for item 5 satisfies the business entity principle.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme.