Question

A's trial balance contains the following information :
Discount allowed, Rs 1,000
Provision for discount, Rs. 3,000 on debtors
It is desired to make a provision for discount on debtors, Rs. 3,500. The amount to be debited to profit and loss a/c is____________.

• A. Rs. 4,500
• B. Rs. 4,000
• C. Rs. 1,500
• D. Rs. 500

Answer 1

The correct option is C Rs. 1,500

P & L A/c to be debited = New provision +Discount allowed - old provision

= Rs 3,500 + Rs 1000 - Rs 3,000.

= Rs 1,500 to be debited.