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How is a provision for doubtful debts created

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Reference no: EM132613003

Question - A clothing wholesaler is experiencing cash flow problems for several years due to its accounts receivables. Some of the amounts due by debtors are irrecoverable and the company is contemplating creating a provision for doubtful debts.

(a) How is a provision for doubtful debts created and maintained? Explain, with figures if necessary

(b) Discuss, the concept or convention on which a provision for doubtful debts is based.

(c) Explain, the differences between a bad debt and a provision for doubtful debts.

Reference no: EM132613003

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