Question

The following balances appeared in the trial balance of M/s Kapil Traders as on March 31, 2012

	Rs
Sundry debtors	30,500
Bad debts	500
Provision for doubtful debts	2,000

The partners of the firm agreed to records the following adjustments in the books of the Firm: Further bad debts Rs.300. Maintain provision for bad debts 10%. Show the following adjustments in the bad debts account, provision account, debtors account, profit and loss account and balance sheet.

Answer 1

Profit and Loss Account
Dr.								Cr.
Particulars				Amount Rs	Particulars			Amount Rs
Bad Debts			500
	Add: Further Bad Debts		300
	Add: New Provision		3,020
	Less: Old Provision		2,000	1,820

Balance Sheet
Liabilities			Amount Rs	Assets			Amount Rs
				Debtors		30,500
					Less: Further Bad Debts	300
					Less: New Provision	3,020	27,180

Debtors Account
Dr.				Cr.
Date	Particulars	Amount Rs	Date		Particulars	Amount Rs
2012			2012
March 31	Balance b/d	30,500	March 31		Further Bad Debts	300
			March 31		Provision for Doubtful Debts	3,020
			March 31		Balance c/d	27,180
		30,500				30,500

Bad Debts Account
Dr.				Cr.
Date	Particulars	Amount Rs	Date		Particulars	Amount Rs
2012			2012
March 31	Balance b/d	500	March 31		Provision for Doubtful Debts	800
	(As per the Trial Balance)
March 31	Sundry Debtors	300
		800				800

Provision for Doubtful Debts Account
Dr.				Cr.
Date	Particulars	Amount Rs	Date		Particulars	Amount Rs
2012			2011
March 31	Bad Debt	800	April 01		Balance b/d (Old Provision)	2,000
			April 01		Profit and Loss	1,820
					(Balancing figure)
March 31	Balance b/d	3,020
	(New Provision)
		3,820				3,820