Question

Ajay maintains a provision for doubtful debts of 3% of trade receivables.
On 1 January 2011, the balance on the provision for doubtful debts account was $70. The trade receivables amounted to $3500 on 31 December 2011.
Which entry would Ajay make on 31 December 2011?

Accepted Answer

debit: income statement, credit: provision for doubtful debts account

Answer

debit: bad debts account, credit: provision for doubtful debts account

Answer

debit: provision for doubtful debts account, credit: trade receivables account

Answer

debit: provision for doubtful debts account, credit: income statement

Ajay maintains a provision for doubtful debts of 3% of trade receivables. On 1 January 2011, the balance on the provision for doubtful debts account was $70. The trade receivables amounted to $3500 on 31 December 2011. Which entry would Ajay make on 31 December 2011?

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