Sundry debtor..................N20,000
Provision for bad debts........N500
Provision for bad debt at 4% of sundry debtors.
Calculate the provision to be taken to the balance sheet?
N780
N800
N1200
N200
Correct answer is B
The business owner made a provision of 500 as bad debt. Total debt owed was 20,000. At the end of the period, bad debts was 4%. Hence we have;
4% x 20000
0.04 x 20000 = 800