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Bad Debt Accounts

(1) On 1 November 1999, Lin Yew's Provision for Doubtful Debts account had a balance of 3500
This was made up of a general provision of $2000, which was 2% of all his debtors, and a further expected loss of $1500, the total amount owed by one of his customers, Lau Chuen, who had been declared bankrupt.
On 30 November 1999, Lin Yew received payment from Lau Chuen of $0.30 in the final settlement of the debt. The remainder of the debt was written off.

On 31 January 2000 another debtor, Lee Fang, who owed Lin Yew $500, paid only $0.60 in the $ and the remainder of his debt was written off.

On 30 April 2000 Lin Yew wrote off a further sum of $700 made up of various small debtors
On the same date Mohammed Khan, whose debt of $1200 had been written off completely in 1997 when he left the country unexpectedly, returned and paid his debt in full.
On 31 October 2000 Lin Yew adjusted his Provision for Doubtful Debts account to 3% of all debtors: his total debtors outstanding at that date amounted to $110000.

Required
(A)Provision for Doubtful Debts Accounts.
(B)Bad Debts Account
(C)Bad Debts Recovered Accounts
(D) State the effects on Lin Yews Net Profit of the change in the Provision for Doubtful Debts.

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Solution Summary

Prepares Provision for Doubtful Debts Accounts, Bad Debts Account, Bad Debts Recovered Accounts.

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