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• # 55292
• Fri 18 Mar 2011 08:01 PM

I am struggling on one of the questions on my last assignment for level 2, I would contact my tutor but as it's weekend I doubt I'll get a response.

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• # 55298
• Fri 18 Mar 2011 10:17 PM

The answer is in the question which, according to your post, says ".....to be increased to.....".

The alternative would be a question which says "...to be increased by....".

I know that this doesnt exactly answer yor question but it should put you in the right direction.


Geoff
www.accountslegal.co.uk

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• # 55301
• Fri 18 Mar 2011 10:29 PM

That does help Geoff, thank  you, I have got it all to balance now. Thanks again.

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• # 55302
• Fri 18 Mar 2011 10:43 PM

From the wording of your question it sounds like your new bad debt provision is 1,320, because you have increased the provision to 5% of your debtors rather than adding this percentage to your earlier provision. 

Was your original 500 provision set in a previous accounting period/year as an estimate of how many of the debts on the books at that time would not be paid during the current period?  If so, it would have appeared as a debit to the profit and loss account for this previous period, with the other half of the double entry carried forward as a credit balance into your current accounting period/year.  This c/f credit balance is then offset against debits from actual bad debts written off during the current period - because you have already taken the loss during the last period (accruals principle).

If this is the situation in your problem (I am guessing here as I have not seen the question), then your bad debts loss for the current period would be:
Bad debts written off during this period - 500 (provision c/f from previous period) + 1320( provision made during this period for current debts which are expected to be written off as bad debts in a future period).

Or, debit to profit & loss a/c = bad debts actually written off + increase in provision for doubtful debts (=1320-500)

• RW
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• # 55356
• Mon 21 Mar 2011 10:11 PM

Hi SJ,

If you are asked to do a provision as a percentage of the debtors balance, just do the debtors balance x by the %, and that is really the answer. The other 500 will come off the debtors balance, so if dentors was 100 and you are asked to provide a provision for 5%, 5.00 provision and then subtract the 5.00 off the debtors balance, so debtors becomes 95.00,

Kind Regards

Paula Welsh 

• Hello all,
  
  i just noticed we have a forum, just poking around the members area.  My name is Paula welsh and I have been a member since 2005, starting with Associate member and now a full member

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• # 73465
• Sat 06 Aug 2011 10:42 AM

(This is a message for SJ)

SJ, i would very much like to discuss this question with you if that is okay with you?

my email is jonnybach12@hotmail.com

Hope to hear from you soon.  

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