Question

H's Trial Balance contains the following information:
Bad debts Rs. 3,000
Discount allowed Rs. 3,000
Provision for discount on debtors Rs.3,200
Provision for bad debts Rs. 3,500
Sundry Debtors Rs. 50,000
At the end of the year, it is desired to maintain a provision for bad debts at Rs. 4,000 and provision for discount on debtors at Rs. 2,000. Sundry Debtors will appear in the Balance Sheet at a figure of:

• A. Rs. 44,000
• B. Rs. 38,000
• C. Rs. 44,700
• D. Rs. 32,300

Answer 1

The correct option is A Rs. 44,000

Provision for discount on debtors and provision for bad debts are deducted from the sundry debtors balance to show the actual value in the balance sheet. The value of sundry debtors in H's balance sheet will be(50000-4000-2000) i.e., 44000. This is because the new adjustment says to create provision for discount on debtors at Rs 2000 and provision for bad debts at Rs. 4000.