A Sole Trader Has a Number of Debtors

Multiple Choice

A Sole Trader has a number of debtors.The total amount in the Sales Ledger at the end of the financial year is £5,600.However,it is discovered that one debtor who owes £400 has just been declared bankrupt.Past experience shows that approximately 2% of debts are never repaid,and therefore a provision equal to 2% of closing debtors is required.There is currently a provision of £80.Which of the following is the correct adjustment for the provision for bad debts?

A) Make a new provision for bad debts at £112
B) Increase the current provision by £24
C) Make a new provision for bad debts at £104
D) Increase the current provision by £32