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provision for doubtful debts

Tania works for a firm that looks after rented properties. They have a large portfolio of customers and at the year end, the Receivables figure is showing £179,334. The opening receivables figure for the period was £197,500.

Tania is aware that some of the customers will default and have to be written off as irrecoverable debts. She has a list of debts adding up to £8,945 + VAT which she will write off but she is not sure that all the others will pay.

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Last year a provision for doubtful debts of 6.2% was made for doubtful receivables but Tania would like to make a provision for doubtful receivables of 7%.

What figure will Tania post to the income statement in respect of doubtful receivables for this period? Dr or Cr