A sole trader maintains a provision for doubtful debts at 5% of trade receivables. Provision for
doubtful debts at the start of the year was $2750. The following information is available at the end
of the year.
What is the effect on the profit for the year due to the change in the provision for doubtful debts?
1 )
decrease by $875
2 )
decrease by $900
increase by $875
4 )
increase by $900
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