4.4. Irrecoverable debts and provision for doubtful debts
A subsection of Accounting, 7707, through 4. Accounting procedures
Listing 10 of 34 questions
PG a trader sells electrical components. She has provided the following information for the year ended 31 July 2022. $ Sales journal for the year ended 31 July 2022 360 000 Sales returns journal for the year ended 31 July 2022 13 300 Trade receivables at 1 August 2021 28 500 Provision for doubtful debts at 1 August 2021 1 140 Cash book extract of totals for the year ended 31 July 2022 Discount Allowed Cash Bank Bank $ $ $ $ Trade receivables 6 500 335 100 Trade receivables (dishonoured cheques) 4 000 Sales 17 000 Additional information $900 of trade receivables were written off as irrecoverable debts on 31 July 2022. There were no other irrecoverable debts during the year. The provision for doubtful debts is to be set at 4% of trade receivables at 31 July 2022. REQUIRED Prepare the following ledger accounts for the year ended 31 July 2022. Where appropriate show the balance brought down on 1 August 2022. PG Sales account Date Details $ Date Details $ Provision for doubtful debts account Date Details $ Date Details $ Prepare a relevant extract from PG’s statement of financial position at 31 July 2022. PG Extract from statement of financial position at 31 July 2022 List three ways in which PG could reduce the possibility of irrecoverable debts. State two factors PG should consider when setting the provision for doubtful debts.
7707_w22_qp_22
THEORY
2022
Paper 2, Variant 2
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Questions Discovered
34