Use the information below to answer questions
Sundry debtor………………N20,000
Provision for bad debts……..N500
Provision for bad debt at 4% of sundry debtors.
A. N780
B. N800
C. 1200
D. N200
Correct Answer:
Option B – N800
Explanation
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
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