Adjust draft profit for unrecorded provision reduction and partial stationery expense

Steps:

• Start with draft profit of $4000.
• Add $300 for reduction in provision for doubtful debts, increasing profit.
• For $2400 stationery, recognize$400 (1/6) as expense; treat remaining $2000 as prepaid asset.
• Calculate adjusted profit: $4000 +$300 - $400 =$3900.

Why B is correct:

• Matches accrual accounting principle: provisions affect income directly, while expenses are recognized only when incurred (used portion of stationery).

Why the others are wrong:

• A. $1900: Incorrectly expenses full$2400 stationery and omits $300 provision increase.
• C. $6400: Wrongly adds full$2400 stationery as income instead of expensing used portion.

Final answer: B