Use the information below to answer questions Sundry debtor………………N20,000 Provision for bad debts……..N500 Provision for…

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
Correct Answer: Option B
Explanation

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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