A business makes an allowance for doubtful debts of 3% of accounts receivable, also a provision of 1% for discount on accounts receivable. On 1 January 2015 the balances brought forward on the relevant accounts were allowance for doubtful debts £930 and provision for discounts on accounts receivable £301.
(a) Enter the balances in the appropriate accounts, using a separate Allowance for Doubtful Debts Account. During 2015 the business incurred bad debts of £1,110 and allowed discounts of £362. On 31 December 2015 accounts receivable amounted to £42,800.
(b) Show the entries in the appropriate accounts for the year 2015, assuming that the business's accounting year ends on 31 December 2015, also statement of profit or loss extracts at 31 December 2015.