Calculate the bad debts charge and the net receivables from the given data, and show the entries.

How to lay out the answer. Follow the frame, then write it in your own words.

1 · Write off the bad debts. Deduct them from receivables first.
2 · Calculate the required allowance. Percentage × remaining receivables.
3 · Find the change. Required − existing = increase (or decrease if negative).
4 · Show the entries. Bad debts written off; change in the allowance.
5 · Show both statements. Income statement charge; SFP net receivables.

Scoring tip: Label the increase or decrease clearly; examiners check that you did not charge the full allowance again.