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Question

Following information is given in trail balance

Bad debtRs. 3,000Provision for bad debtsRs. 3,500DebtorsRs. 40,000

Additional Information:

It is desired to make a provision for doubtful debts @10% on debtors. Find the amount to be debited to profit and loss account.

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Solution

Amount to be debited to profit and loss account = Rs. 3,500

Provision for Doubtful Debts:
Bad Debts 3,000(+) New Provision @ 10% 4,000–––– 7,000() Old Provision (3,500)–––––– 3,500


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