Question

Question: An extract of Trial balance from the books of Tahiliani and Sons Enterprises on December 31, 2005, is given below.

Name of Account	Debit Amt. (Rs)	Credit Amt. (Rs)
Sundry debtors	$50,000$
Bad debts	$6,000$
Provision for doubtful debts		$4,000$

Additional Information
Bad Debts proved bad not recorded amounted to Rs $2,000$.
Provision is to be maintained at $8\%$ of Debtors.
Give necessary accounting entries for written off the bad debts and creating the provision for doubtful debts account. Also, show the necessary accounts.

Answer 1

Answer
Dr Journal Entries Cr

Date	Particulars	LF	Amt(Dr)	Amt (Cr)
(i)	Bad Debts A/c Dr To Sundry Debtor's A/c (Being bad debts charged from debtors)		$2,000$	$2,000$
(ii)	Provision for Bad Debts A/c Dr To Bad Debts A/c (Being account of bad debts transferred to provision for bad debts account(6000+2000) ) (Previous + New)		$8,000$	$8,000$
(iii)	Profit and Loss A/c Dr To Provision for Doubtful Debts A/c (Being amount of provision for doubtful debts transferred to Profit and Loss Account)		$7,840$	$7,840$

Dr Bad Debts Account Cr

Date	Particulars	JF	Amt. (Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Dec 31	To Balance b/d		$6,000$	2005 Dec 31	To Provision for Doubtful Debts A/c		$8,000$
Dec 31	To Sundry Debtor's A/c		$2,000$		Debts A/c		$8,000$
			$8,000$				$8,000$

Dr Provision for Doubtful Debts Account Cr

Date	Particulars	JF	Amt.(Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Dec 31	To Bad Debts A/c (6000+2000) (Old + New)		$8,000$	2005 Jan 1	By Balance c/d		$4,000$
Dec 31	To Balance c/d $(48,000\times 8\%)$		$3,840$	Dec 31	By Profit & Loss A/c		$7,840$
			$11,840$				$11,840$

Dr Debtor's Account Cr

Date	Particulars	JF	Amt. (Rs)	Date	Particulars	JF	Amt.(Rs)
2005 Dec 31	To Balance b/d		$50,000$	2005 Dec 31	By Bad Debts A/c		$2,000$
				Dec 31	By Balance c/d		$48,000$
			$50,000$				$50,000$