Use the information below to answer questions

Sundry debtor..................N20,000

Provision for bad debts........N500

Provision for bad debt at 4% of sundry debtors.

Calculate the provision to be taken to the balance sheet?

  • A N780
  • B N800
  • C 1200
  • D N200
jamb 2010accounting

The correct answer is B. N800

The business owner made a provision of 500 as bad debt. Total debt owed was 20,000. At the end of the period, bad debts was 4%. Hence we have; 

4% x 20000

0.04 x 20000 = 800

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