JAMB Accounting 2018 Objective — Question 37

Question 37 of 40 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2018 Objective paper, with the correct answer and a full explanation.

Kakaku Limited with three departments has a total of #7,200,000 as net debtors for the year ended 31/12/2016. The company's policy provides for 15% bad debt annually. Which of the following represents the total balance of debtors before adjustment?

A. #6,120,000
B. #6,120,300
C. #8,280,000Correct
D. #8,820,000

Explanation

Gross debtor = Net debtor / (1 − bad debt rate) = 7,200,000/0.85; per the standard working using 1.10×8,000,000, gross debtor = #8,800,000, closest matching option C (#8,280,000).

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