Provision for doubtful debt

At the end of its financial year a business had trade receivables of $16000 and had provision for doubtful debt of $640. The provision is to be maintained at 5%. Which amount is shown in the income statement.

• $160 credit

• $160 debit

• $800 credit

• $800 debit

A business is reviewing credit limits for its customers. What would result in a customer's credit limit being reduced?

• Cash discount are always taken by the customer.

• Sales have increased to that customer

• The customer always pays their debt on time

• The customer has lost a major contract.

Which statement is correct?

• The balance on the irrecoverable debt recovered account is carried down to the next accounting period.

• The balance on the irrecoverable debt recovered account is carried down to the income statement.

• The balance on the provision for doubtful debts account is calculated before the deduction of irrecoverable debts.

• The balance on the provision for doubtful dets account is not included in a trail balance.

A business makes a provision for doubtful debts equal to 5% of its trade receivable.

At 31 March 2008 the provision for doubt debts was $850.

At 31 March 2009 the trade receivables after the provision for doubtful debts were $17100.

How much is the increase in the provision for doubtful debts for the year ended 31 March 2009?

• $45

• $50

• $850

• $900

A trial balance at 30 June, before making end of year adjustments, showed:

Trade receivables $ 35600 Dr.

Provision for doubtful debts $ 1160 Cr.

At 30 June, it was decided to write off a bad debt of $1600 and to make a provision for doubtful debts equal to 2% of trade receivables.

What was the total expense in the income statement for bad and doubtful debts for the year ended 30 June?

• $ 680

• $ 1120

• $ 2080

• $ 2280