Provision for doubtful debts
 

ASA
just started final accounts and i am facing some problems if any person can help in this regard i would be grateful
the problem is
sundry debtors=1,41,000
provision for b.debts=6000


adjustments
bad debts to be written off =3000
provisions are to be increased by 5%

journal entries
1.b.debts 3000
acc rec 3000
2.b.debts 6900
pro for bad debts 6900
t accounts
bad debts
----------------------------------------
A\R 3000|income statement 9900
provision 6900|
|

provision for D.D
----------------------------------------
|bal 6000
bal c,f 12900 |increase in provision 6900

-----------------------------------------
profit and loss account
rs 9900 will be shown in p & l acc on the debit side (new + b.debts - old provisions)
and amount of 6900 + 3000 will be deducted from debtors from balance sheet


[B]is it right or wrong[/B]

My calculation
 

Provision for doubtful accounts
W/o 3000 bf 6000

c/f 6300 IS charge3300
9300 9300


1. Dr. Provision for doubtful accounts 3000
Cr. Accounts Receivables 3000

2. Dr. Bad debt Exp 3300
Cr. Provision for doubtful accounts 3300


Accounts receivables 141000
- w/o (3000)
- Provision (6300)

B/S fig 131700

@sunny saim
3000 were to be written off and the correct entry would be
dr. bad debts 3000
ce. Acc rec 3000

instead of

1. Dr. Provision for doubtful accounts 3000
Cr. Accounts Receivables 3000

and where did u get 3300?

Dear Brother,

Some companies maintain provision/allowance a/c and some do not. The entries you have made would have been correct if those were of the one's not maintaining the provision a/c.

But whan provision account is maintained you will do the following:

0. Make a T account.
1. Op bal of provision is Cr. 6000
2. Bad debts W/o Dr. 3000
3. new Provision (6000*1.05) Dr. 6300 which will be the c/f figure.
4. the balancing fig is Cr. 3300 (which will be charged to IS as Bad debts)

I hope this makes you understand.

Yes, this seems right.

Are you a professional accountant?

@sunny saim
so how to know what is right and what to do
actually this question is from sohail afzal book (b.com I) final accounts question 22 i think so. what is the correct answer???both of these are correct?

any other member can help me solve the problem?