Year-end provision for doubtful debts Steps:

• Identify the company's policy: maintain provision at 5% of closing trade receivables.
• Determine closing trade receivables on 31 December 2022: $12,800.
• Calculate required provision: 5% × $12,800.
• Result: $640 (closing balance of provision).

Why B is correct:

• The policy requires the provision to equal 5% of year-end trade receivables ($12,800 × 0.05 =$640).

Why the others are wrong:

• A: Equals opening provision ($600); ignores year-end adjustment.
• C: Incorrect calculation (e.g., 5% of $13,200 =$660).
• D: Incorrect calculation (e.g., 5% of $13,400 =$670).

Final answer: B