Louhi made the following entries in her ledger.
account debited | account credited |
irrecoverable debts | Jaden |
What was she recording?
A credit customer has failed to pay by an agreed-upon date
A debt has been recovered which had previously been written off
An amount owed by a credit customer cannot be recovered
Louhi has been unable to pay her supplier
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A business maintains a provision for doubtful debts of 4% of trade receivables. The balance on the provision for doubtful debts account on 31 December 2022 was $2 500.
On 31 December 2023 the trade receivables amounted to $70 000.
How will the required adjustment to the provision for doubtful debts be recorded?
provision for doubtful debts account | $ | income statement | $ | |
|---|---|---|---|---|
A | credit | 300 | added to gross profit | 300 |
B | credit | 300 | deducted from gross profit | 300 |
C | debit | 300 | added to gross profit | 300 |
D | debit | 300 | deducted from gross profit | 300 |
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Danny's books included the following balances on 1 November 2023.
$ | |
trade receivables | 85 600 |
provision for doubtful debt | 2 568 |
Trade receivables at 31 October 2024 were $79 200, of which $600 should be written off as irrecoverable.
Danny wants to maintain his provision for doubtful debts at 3% of trade receivables.
What was the change in the provision for doubtful debts at 31 October 2024?
$192 decrease
$210 decrease
$390 increase
$408 increase
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On 4 April, Onni wrote off $375 owed to him by Marial, a credit customer, as being irrecoverable.
On 2 November, Marial paid $150 by cheque in part settlement of that debt.
Which entries should Onni make on 2 November?
account to be debited | amount to be credited | |
|---|---|---|
A | bank | debts recovered |
B | bank | irrecoverable debts |
C | debts recovered | bank |
D | irrecoverable debts | bank |
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Janet maintains a provision for doubtful debts of 6% of trade payables, calculated at the end of each financial year.
On 1 April 2023 the balance on her provision for doubtful debts account was $648.
On 31 March 2024 trade receivables owed $4 000 less than they owed on 31 March 2023.
How did the change in the provision for doubtful debts affect the profit for the year ended 31 March 2024?
$240 decrease
$240 increase
$408 decrease
$408 increase
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Gerdan Duo Limited maintains a provision for doubtful debts account. This account had a balance of $5 400 on 1 January 2023.
The provision should have been decreased to $4 100 on 31 December 2023, but this adjustment was not made.
What was the effect of this error on the retained earnings in the statement of financial position on 31 December 2023?
overstated $1 300
overstated $4 100
understated $1 300
understated $4 100
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Mary sells goods on credit and maintains a provision for doubtful debts. She wants to decrease her provision for doubtful debts by $650.
Which journal entry records this decrease in the provision for doubtful debts?
debit $ | credit $ | ||
|---|---|---|---|
A | credit customer income statement | 650 |
650 |
B | income statement credit customer | 650 |
650 |
C | income statement provision for doubtful debts | 650 |
650 |
D | provision for doubtful debts income statement | 650 |
650 |
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