Correct Answer: Option D

Explanation

The business owner made a provision of 500 as bad debt. Total debt owed was 20,000. At the end of the period, bad debts was 4%. Hence we have; 

4% x 20000
0.04 x 20000 = 800

we subtract the total bad debt from the amount that was initially provided for bad debt and charge it to the profit and loss account as a expense

Provision for bad debts = 500
800 - 500 = 300

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