Recording Provision for Discount

Q.

Debtors: Rs. 30, 000. Bad debts: Rs. 300, provision for bad debt 5% on debtors, discount on debtors 2%.
Calculate the correct amount of provision for discount on debtors.

1. Rs. 29, 700

2. Rs. 600

3. Rs. 1, 485

4. Rs. 564

Q.

By providing for discount on debtors and making provision for doubtful debts, which accounting concept is followed?

Q.

What is the correct accounting adjustment entry to record provision for discount on debtors?

1. Bad debts A/c Dr

   To Provision for doubtful debts A/c

2. Bad debts A/c Dr

   To Debtors A/c

3. Provision for discount on debtors A/c Dr

   To Profit & Loss account

4. Profit & Loss A/c Dr

   To Provision for discount on debtors A/c

Q.

Is provision for discount on debtors made before making provision for doubtful debts?

Q.

In case of actual discount when provision for discount on debtors is made, the discount account is debited with a corresponding credit in _____account.

1. Debtor`s account

2. Profit & Loss account

3. Provision for doubtful debts account

4. Creditor`s account

Q.

What is the reason for the creation of a provision for discount on debtors?

1. To fulfil the accrual concept

2. To fulfil the going concern concept

3. To fulfil the prudence concept

4. None of the above

Q. D's Trial Balance contains the following information: Discount allowed Rs. 500, Provisions for discount on debtors Rs. 1, 100. It is desired to make a provision for discount on debtors of Rs. 1, 800 at the end of the year. The amount to be debited to the Profit & Loss Account is:

1. Rs. 1, 200
2. Rs. 700
3. Rs. 3, 200
4. Rs. 2, 200

Q. From the Following Ledger balances Prepare a Trial Balance as on 31st March, 2012 of Mr. Udaysingh.

Particulars	Rs	Particulars	Rs	Particulars	Rs
Goodwill	40, 000	Plant & Machinery	60, 000	Patents	20, 000
Salary	7, 000	General expenses	2, 200	Rent	9, 000
Carriage	5, 500	Trade expenses	3, 000	Furniture	20, 000
Advertisement	4, 800	Opening stock	27, 000	Printing & Stationery	10, 200
Electricity charges	1, 650	Sundry Debtors	31, 500	Discount (Dr.)	2, 300
Purchases	78, 500	Sundry Creditors	66, 000	Discount (Cr.)	3, 650
Sales	1, 52, 500	Land & Building	70, 000	Cash in hand	4, 500
Capital	1, 40, 000	Bank overdraft	35, 000

Q. While preparing final account, to make provision for discount on debtors. which of the following adjustment entry will be passed?

Provision for Discount on Debtors A/c To Debtors A/c	Dr.
Profit & Loss A/c To Provision for Discount on Debtors A/c	Dr.
Provision for Discount on Debtors A/c To Trading A/c	Dr.
Debtors A/c To provision for Discount on Debtors A/c	Dr.

1. A
2. C
3. D
4. B

Q.

How to calculate discount on debtors?

Q. Question

Q.

Following is the Trial Balance of Supriya Gandhi as on 31st March 2011, you are required to Prepare Trading and Profit and Loss Account for the year ended on 31st March, 2011 and Balance Sheet as on that date.

Trial Balance as on 31st March, 2011
Particulars	Amount Rs	Particulars	Amount Rs
Plant and Machinery Loose Tools Carriage and Freight Postage and Telegram Motive Power Debtors Trade expenses Advertisement Furniture Wages Purchases Opening Stock Printing and Stationery Interest on Bank Loan Land and Building Goodwill Discount Cash in hand	80, 000 10, 000 8, 600 1, 400 6, 000 24, 000 600 3, 000 14, 000 28, 000 59, 000 20, 800 5, 200 3, 000 1, 00, 000 26, 600 800 1, 000	15% Bank Loan (taken on 1-10-2010) Capital Creditors Commission Sales Discount	60, 000 1, 40, 000 40, 000 1, 000 1, 50, 000 1, 000
Total	3, 92, 000	Total	3, 92, 000

Q. While creating provision for discount on debtors, profit or loss account is:

1. Credited
2. Debited

Q. The adjustment entry for creating provision for discount on debtors is:

Profit or loss A/c Dr
To Provision for discount on debtors A/c

1. False
2. True

Q. Rs. 1, 500 being the total of discount column on the credit side of the cash book was not posted in the general ledger. If this error located after preparation of final account then which of the following rectification entry is correct?

1. Suspense A/c Dr. 1, 500
   To Profit & Loss Adj. A/c 1, 500
2. Profit & Loss Adj. A/c Dr. 1, 500
   To Suspense A/c 1, 500
3. Discount A/c Dr. 1, 500
   To Profit & Loss Adj. A/c 1, 500
4. Profit & Loss Adj. A/c Dr. 1, 500
   To Discount A/c 1, 500