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#1
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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 is it right or wrong |
#2
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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 |
#3
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@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? |
#4
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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.
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The only thing necessary for the triumph of evil is for good men to do nothing. |
#5
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Yes, this seems right.
Are you a professional accountant?
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“A Momin does not taunt, does not curse and reproach, does not indulge in obscene talking and obscene acts.” [Tirmidhi] |
#6
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@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? Last edited by Shooting Star; Friday, June 08, 2012 at 04:18 PM. Reason: merged |
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