Ali’s trade receivables at 31 December 2019 were $\$ 26500$. He knew that $\$ 400$ of these were irrecoverable.
He wished to maintain a provision for doubtful debts equal to 5% of the trade receivables.
At 1 January 2019 the balance of the provision for doubtful debts was $1200.
Which entry does Ali make in the provision for doubtful debts account at 31 December 2019?
$105 credit
2 )
$105 debit
3 )
$125 credit
4 )
$125 debit
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