Extract of a Trial Balance as at March 31, 2017 is as follows:

Sundry Debtors ₹ 1,02,000

Bad Debts ₹ 1,400

Provision for doubtful debts ₹ 3,400

Additional information:
A debtor of ₹ 2,000 could not be recovered. It is decided to maintain Provision for Doubtful Debtors @ 5% on Debtors and Provision for Discount at @ 2%.
How these adjustments will be shown in Financial Statements?

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Solution

Extract of Profit and Loss Account
for the year ended March 31, 2017

Dr.

Cr.

Particulars

Amount
(Rs)

Particulars

Amount
(Rs)

Old Bad Debts
1,400

Add: Further Bad Debts
2,000

Add: New Provision
5,000

Less: Old Provision
3,400

5,000

Provision for Discount on Debtors
1,900

Extract of Balance Sheet
as on March 31, 2017

Liabilities

Amount
(Rs)

Assets

Amount
(Rs)

Current Assets

Debtors
1,02,000

Less: Further Bad Debts
2,000

Less: Provision for Doubtful Debts
5,000

Less: Provision for Discount on Debtors
1,900

93,100

Working Notes:

WN1: Calculation of Provision for Doubtful Debts

WN2: Calculation of Provision for Discount on Debtors

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Similar questions

Q. A Trial Balance contains the following information :

Bad debts	Rs.5,000
Discount allowed	Rs.4,000
Provision for discount on debtors	Rs.2,000
Provision for Doubtful Debts	Rs.5,000
Sundry Debtors	Rs.50,000

At the end of the year, it is desired to maintain a provision for debts at Rs. 4,000 and provision for discount on debtors at Rs.2,000. Sundry Debtors (after provision) will appear in the Balance Sheet at a figure of :

The following balances appeared in the trial balance of M/s Kapil Traders as on March 31, 2017

	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.

Q. A trial balance contains Debtors Rs 15000, Bad Debts Rs 400 and Provision for Doubtful Debts Rs. 600. Further bad debts given in adjustments are Rs. 400. If a provision at

5 %

is made on Debtors. P & L A/c will be debited with:

Q. Sundry debtors given in the Trial Balance are Rs. 20000. Further bad debts amounted to Rs. 1000 and it is desired to create a provision of

5 %

on debtors for doubtful debts and

2 %

for discount. Sundry Debtors will appear in the Balance Sheet at a figure of________.

Q. Extracts of Trial Balance as at 31st March, 2017:

	Dr. (₹)	Cr. (₹)
Sundry Debtors (including Dewan for dishonoured bill of ₹ 20,000)	4,80,000	–
Provision for Doubtful Debts	–	24,000
Bad Debts	10,000	–

Adjustments:
(i)

\frac{3}{4} th

of Dewan's bill is irrecoverable.
(ii) Create a provision of 6% on Sundry Debtors.
Show the effect on Profit and Loss Account and Balance Sheet.

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Sundry Debtors	₹ 1,02,000
Bad Debts	₹ 1,400
Provision for doubtful debts	₹ 3,400

Extract of Profit and Loss Account for the year ended March 31, 2017
Dr.					Cr.
Particulars		Amount (Rs)	Particulars	Amount (Rs)
Old Bad Debts	1,400
Add: Further Bad Debts	2,000
Add: New Provision	5,000
Less: Old Provision	3,400	5,000
Provision for Discount on Debtors		1,900

Extract of Balance Sheet as on March 31, 2017
Liabilities	Amount (Rs)	Assets		Amount (Rs)
		Current Assets
		Debtors	1,02,000
		Less: Further Bad Debts	2,000
		Less: Provision for Doubtful Debts	5,000
		Less: Provision for Discount on Debtors	1,900	93,100