Adjusting the provision of general bad debt

Discussion in 'UK Accountancy' started by Leeu, Oct 20, 2011.

  1. Leeu

    Leeu

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    Hi all,

    Well I have searched high and low through books and the internet but I cannot find my answer, so I thought who better to ask than those brilliant minds of the accountant forums.

    Here’s my problem:

    I need to adjust the provision for general bad debt to 3% of the remaining total debtors.
    The total debtors are £94,500 and the general bad debt provision is currently £2,000.

    My attempt at working it out was to do £94,500 x 3% = £2,835 but I have my doubts that this is right. If it is please confirm and i am happy, if it’s not PLEASE would somebody put me out of my misery and show me how to work it out.

    Thanks
     
    Leeu, Oct 20, 2011
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  2. Leeu

    Robert Pearce

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    The general provision does need to be £2,835 (£94,500 x 3%).

    As the general bad debt provision is currently £2,000, you would need to make the following adjustment:

    CR General bad debt provision - £835
    DR Bad and doubtful debts (P&L) - £835
     
    Robert Pearce, Oct 21, 2011
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