• 1 Marks

FA – Nov 2011 – L1 – SA – Q16 – Bases of Accounting: Accrual vs. Cash

This question asks for the trade debtor's balance to be shown in the balance sheet after making a 5% provision for doubtful debts.

What is the trade debtors’ balance to be shown in the balance sheet if 5% is the provision for doubtful debts?

N741,475

Explanation: Trade debtors are N780,500. A provision of 5% is to be made, which amounts to N39,025 (5% of N780,500). Subtracting the provision from the trade debtors balance gives N741,475, which will be shown in the balance sheet as the adjusted trade debtors balance.

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