O-LevelAccountingPreparation of financial statements7707/11 · May/June 2010 · Q121 Mark

Rashid maintains a provision for doubtful debts of 5% of the trade receivables (debtors) at the end of each year. Trade receivables (debtors) owed $40 000 on 31 December 2008. Trade receivables (debtors) owed $46 000 on 31 December 2009. Which journal entry should Rashid make on 31 December 2009?

AIncome statement (profit and loss) 300 Provision for doubtful debts 300

BIncome statement (profit and loss) 2300 Provision for doubtful debts 2300

CProvision for doubtful debts 300 Income statement (profit and loss) 300

DProvision for doubtful debts 2300 Income statement (profit and loss) 2300

✓ Correct answer

A: Income statement (profit and loss) 300 Provision for doubtful debts 300

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Topic: Preparation of financial statements, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2010 Paper 1 Variant 1, question 12.

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Rashid maintains a provision for doubtful debts of 5% of the trade receivables (debtors) at the end of each year. Trade receivables (debtors) owed $40 000 on 31 December 2008. Trade receivables (debtors) owed $46 000 on 31 December 2009. Which journal entry should Rashid make on 31 December 2009?

✓ Correct answer

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