Sundry debtors in the balance sheet of Onoja Bakery and Sons totalled N800,000. A provision of 2% was made for discount and 5% provision for bad and doubtful debts. Find the amount for sundry debtors after provision.
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Correct Answer: Option B
Explanation:
1. First deduct the provision for bad debts from sundry debtors.
2. Then calculate the discount provision on the resulting (adjusted) balance
Given:
- Sundry Debtors = ₦800,000
- Provision for Bad Debts = 5%
- Provision for Discount Allowed = 2%
Step 1: Provision for Bad Debts
\[
5\% \times ₦800,000 = ₦40,000
\]
\[
₦800,000 - ₦40,000 = ₦760,000
\]
Step 2: Provision for Discount on the Net Debtors
\[
2\% \times ₦760,000 = ₦15,200
\]
Step 3: Final Net Sundry Debtors
\[
₦760,000 - ₦15,200 = ₦744,800
\]
Correct Answer: B. ₦744,800
1. First deduct the provision for bad debts from sundry debtors.
2. Then calculate the discount provision on the resulting (adjusted) balance
Given:
- Sundry Debtors = ₦800,000
- Provision for Bad Debts = 5%
- Provision for Discount Allowed = 2%
Step 1: Provision for Bad Debts
\[
5\% \times ₦800,000 = ₦40,000
\]
\[
₦800,000 - ₦40,000 = ₦760,000
\]
Step 2: Provision for Discount on the Net Debtors
\[
2\% \times ₦760,000 = ₦15,200
\]
Step 3: Final Net Sundry Debtors
\[
₦760,000 - ₦15,200 = ₦744,800
\]
Correct Answer: B. ₦744,800