IGCSE/GCSE/O & A Level/IB/University Student Forum
Qualification => Subject Doubts => GCE AS & A2 Level => Commerce => Topic started by: ~cornelia~ on October 16, 2011, 06:58:08 pm
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its a multiple choice question...tell me how we get the answer!?
the trail balance of a business at 31 may 2004 included,
Debtors- $13400(Dr) and Provision for doubtful debts -$730(cr)
at 31 may 2004 it was found that the debtors included a bad debt of-$650. it was decided to adjust the provision for doubtful debts at 4% of debtors. a debt of $420, which had been written off on jan 2003 was recovered on jan 2004.
what is the effect of these events on the P&L account for the year ended 31 may 2004??
a. Cr $10
b. Dr $10
c. Cr $36
d. Dr $36
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Is this a past paper?
???
My answer came out to be 'B'. If its correct I can explain it.
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^no its not pastpaper...its from the text book!
omg.yes! the answer is B...please tell me how? ???
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Debtors @ 31 may 2004 (13,400 - 650) =12750
Provision required @ 31 MAy 2004= 12750 x 4/100 =510
Balance in PFDD a/c = =730
Provision needs to be reduced(credited in p/l) by(730-510) = 220 cr
Bad debts for the year = 650 dr (expense)
Bad debts recovered = 420 cr(income)
Net figure to be debited in P/L =10 dr
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There you go, explained.
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^thanks alot Dasith and lastgift!!
one more question! how do we know wether its Dr or Cr??
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The total of expenses=$ 650 is greater than the income $ 640.
The net effect of it implies that we need to reduce the profit by $10, thus you debit the P&L to record the loss. :)
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^thanks alot Dasith and lastgift!!
one more question! how do we know wether its Dr or Cr??
u r welcome :D , When do u hav u r exams ?
The total of expenses=$ 650 is greater than the income $ 640.
The net effect of it implies that we need to reduce the profit by $10, thus you debit the P&L to record the loss. :)
think u get da ans 4 u r q here ;)
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Haha, yeah. Shared responsibility :P
You are through with your A levels?
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Haha, yeah. Shared responsibility :P
You are through with your A levels?
hehe XD
yeap i did it in may :D
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Thought so! Read your posts all over the commerce section. Impressive fluency. :)
How did they go? Which other subjects?
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Thought so! Read your posts all over the commerce section. Impressive fluency. :)
How did they go? Which other subjects?
Hehe XD ,
hmm they went well, i took Econ , accounts & computing
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The total of expenses=$ 650 is greater than the income $ 640.
The net effect of it implies that we need to reduce the profit by $10, thus you debit the P&L to record the loss. :)
i see! thanks alot.... :D
Hehe XD ,
hmm they went well, i took Econ , accounts & computing
oh man....i thought maybe you could help me with business too!! :-\
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i see! thanks alot.... :D
oh man....i thought maybe you could help me with business too!! :-\
BS hmm
Tohru Kyo Sohma might b able 2 help u out wid dat, i knw very little about BS , i might sometimes b able to help u out in BS in calculations & stuff .
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oh good,
calculations are my weak point :)
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Hey dasith I have a doubt with your calculation. The question says that the bad debt of 650 is included in the debtors calculation given in the trial balance so why do we subtract it again from the debtors figure to get the figure of 12750? ???
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Hey dasith I have a doubt with your calculation. The question says that the bad debt of 650 is included in the debtors calculation given in the trial balance so why do we subtract it again from the debtors figure to get the figure of 12750? ???
Yea exactly thats the whole idea of deducting it!, IF the trail balance figure includes bad debts (not adjested for) then we deduct the unadjested bad debts to get the correct figure, for debtors.If the question dosent say anything about bad debts being inluded, then we dont deduct from debtors...
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Yeah exactly my point. The question says - at 31 may 2004 it was found that the debtors included a bad debt of-$650. Now if the debtors figure in the trial balance adjusts for the bad debts then again subtracting it would be wrong. :/
The word "includes" in this context means "debtors adjusted for bad debts", or "debtors not adjusted for bad debts"?
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Yeah exactly my point. The question says - at 31 may 2004 it was found that the debtors included a bad debt of-$650. Now if the debtors figure in the trial balance adjusts for the bad debts then again subtracting it would be wrong. :/
The word "includes" in this context means "debtors adjusted for bad debts", or "debtors not adjusted for bad debts"?
ohh so its a problem of understanding the question , Word included means the bad debts are in the figure for debtors ( in other words not adjested for) in order to correct that we deduct the bad debts from debtors.
IF the word exclude was there then wat u said is correct ..
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Ohhh now I've understood what you said. Thank you so much for your help. :) +Rep