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Balance of Provision for Doubtful on 1st April, 2017.Rs Bad debts written off in the year ended 31st March, 2018. 3,000 Sundry Debtors after writing off bad debts.2,000 Bad debts after written off in the year ended 31st March, 2019.60,000 Sundry debtors before writing off bad debts.500 Maintain Provision for Doubtful debts at 5%.20,500 Prepare Bad Debts Account and Provision for Doubtful debts account . |
Answer» Solution :  Notes : 1. For the YEAR ended 31st March, 2018, BALANCE in the Provision for Doubtful Account (OLD Provision - Rs 3,000) is less than the amount required to meet Bad Debts (Rs 2,000) and New Provision (Rs 3,000), therefore, the short amount of Rs 2,000(i.e., `Rs 2,000 + Rs 3,000 - Rs 3,000`)is debited to Profit and Loss Account. 2. For the year ended 31st March, 2019, balance in the Provision for Doubtful Debts Account (Old Provision - Rs 3,000) is more than the amount required to meet Bad Debts (Rs 500) and New Prvision (Rs 1,000), therefore, the excess amount of Rs 1,500 is CREDITED (written back) to Profit and Loss Account. |
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