Trade receivables as at 31 December 20X1 were $25,000. The bad debt provision as at 1 January 20X1 was $812. During the year to 31 December 20X1 bad debts of $2,000 have been written off to administration expenses. After the year end, but before the accounts had been completed, the entity discovered that a major trade receivable had gone into liquidation and that their outstanding balance of $3,000 was very unlikely to be paid. As a result of the recent bad debt experience the directors have decided to increase the bad debt provision at 31 December 20X1 to 5 per cent of outstanding trade receivables.

What is the correct balance for trade receivables, net of bad debt provision, as at

31 December 20X1?

(A) $19,000

(B) $20,900

(C) $23,750

(D) $21,188

What is the correct charge to the income statement for bad debts and bad debt provisions for the years to 31 December 20X1?

(A) $4,100

(B) $6,100

(C) $5,288

(D) $3,288