provision and contingent liability - Question 12.13

You need to tell me which book you are referring to (and what help you need).

Hi John I am referring to BPP. I am not sure how they figure out the last part where they get the answer 18500 ? Could you please explain it.

The provision at the start of the year was $64,000. They paid claims during the year of $25,000. The leaves a balance remaining of $39,000. The provision required at the end of the year is $57,500. Therefore the increase required is 57,500 - 39,000.

great quite simple to be honest. I am not sure why i didn't get that. Thanks John

You are welcome :-)