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The following details relate to Albert EnterpriseDebtors a/cbalance debitBad debts to bewritten offProvision fordoubtful debts31/12/2017 Shs100,000 Shs 8,000 10% of theremaining debtors31/12/2018 Shs 74,000 Shs10,000 8% of theremaining debtorsRequired :For each of the year ended 31/12/2017 and 31/12/2018, open the following ledgeraccounts and make the necessary adjustments in respect of bad debts and provision fordoubtful debts. Balance off the accounts.i)Debtors a/cii)Bad debts a/ciii)Provision for doubtful debts a/civ)Profit and loss a/c

Question

The following details relate to Albert Enterprise

Debtors a/c balance debit

Bad debts to be written off

Provision for doubtful debts

Date Details Amount
31/12/2017 Shs 100,000
Bad debts 8,000
Provision 10% of the remaining debtors
31/12/2018 Shs 74,000
Bad debts 10,000
Provision 8% of the remaining debtors

Required:

For each of the year ended

  • 31/12/2017
  • 31/12/2018

Open the following ledger accounts and make the necessary adjustments in respect of bad debts and provision for doubtful debts. Balance off the accounts.

  1. i) Debtors a/c
  2. ii) Bad debts a/c
  3. iii) Provision for doubtful debts a/c
  4. iv) Profit and loss a/c
...expand
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Solution

To open the ledger accounts and make the necessary adjustments for bad debts and provision for doubtful debts for the years ended 31/12/2017 and 31/12/2018, follow these steps:

  1. Open the Debtors account:

    • Debit the opening balance of the Debtors account with Shs100,000 for 31/12/2017 and Shs74,000 for 31/12/2018.
    • Credit the closing balance of the Debtors account with the same amount.

  2. Open the Bad Debts account:

    • Debit the Bad Debts account with Shs8,000 for 31/12/2017 and Shs10,000 for 31/12/2018.
    • Credit the closing balance of the Bad Debts account with the same amount.

  3. Open the Provision for Doubtful Debts account:

    • Debit the Provision for Doubtful Debts account with 10% of the remaining debtors for 31/12/2017 and 8% of the remaining debtors for 31/12/2018.
    • Credit the closing balance of the Provision for Doubtful Debts account with the same amount.

  4. Open the Profit and Loss account:

    • Debit the Profit and Loss account with the amount written off as bad debts (Shs8,000 for 31/12/2017 and Shs10,000 for 31/12/2018).
    • Credit the closing balance of the Profit and Loss account with the same amount.

  5. Balance off the accounts:

    • Calculate the closing balance of each account by subtracting the credit side from the debit side.
    • Record the closing balance on the respective side of each account.

By following these steps, you will have opened the necessary ledger accounts and made the adjustments for bad debts and provision for doubtful debts for the years ended 31/12/2017 and 31/12/2018.

This problem has been solved

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