Please check this adjustment
 

Bad debts=1250
Provision for bad debts=2000
Debtors=38000
Adjustment
Write off a further sum of Rs.1000 as bad debt and provision for bad debts to be made equal to 10% of debtors

My answer

[LEFT][CENTER] Allowance for bad debts A/C[/CENTER]
[/LEFT]

[U] [SIZE="4"]Debit [/SIZE][/U]


Write off Rs.1000
Bad debt exp b/d Rs.1250
Bal c/d(38000810%) Rs.3800


[U][SIZE="4"]Credit[/SIZE][/U]


Balance b/d Rs.2000
Bad debt exp(Bal figure) Rs.4050

[SIZE="4"][B]Bad debts expense in Income Statement will be Rs.4050
Allowance for bad debts in Balance Sheet will be Rs.3800

[/B][/SIZE]
Kindly correct me if i am making some mistake:pp

Its answer will be as follows:

[B][U][CENTER]Allowance for bad debts a/c[/CENTER][/U][/B]
[U]Debit side:[/U]
Amount written off-------------------------------------------1000
Closing balance----------------------------------------------[U]4800[/U]
[B]Total[/B]-----------------------------------------------[U]5800[/U]


[U]Credit side:[/U]
Opening balance---------------------------------------------2000
Provision for BD @10% of debtors i-e 10% of 38000------------[U]3800[/U]
[B]Total[/B]-----------------------------------------------[U]5800[/U]

Income statement will show Rs.5050(1250+3800)
B/sheet will show all for BD Rs.4800

Balance Sheet figure is doubtful, i think it must be 3800(Closing amount of debtors 38000*10%).
Income Statement figure is correct i have done it again:bow

You know that closing balances of ledgers are posted into financial stats(income stat and b/sheet). I have done the same;I posted closing balance of the ledger,titled Allowance for bad debts A/c,into B/sheet. Thus Rs.4800.

Hi Dear
The total bad debts expenses in Income Statement will be 1000 + 1250 = 2250 and provision for bad debts is as follows.:
38000- 1000 bad debts = 37000 x 10% = 3700
3700- 2000 old provisions = 1700
so total bad debts expenses for Income statement will be
1700+2250 = 3950

while in Balance sheet:
Debtors 38000
less: bad -1000
less: provision -3700
total debtors 33300