Ajay maintains a provision for doubtful debts of 3% of trade receivables. On 1 January 2016, the balance on the provision for doubtful debts account was $70. The trade receivables amounted to $3500 on 31 December 2016. Which entry did Ajay make on 31 December 2016?
✓ Correct Answer
The correct answer is B: debit income statement, credit provision for doubtful debts account
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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