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Question

In the trial balance are shown Debtors Rs. 2400, Bad Debts Rs 221, Bad Debts Reserve Rs 324. For creating a Reserve for Doubtful Debts @ 10% on debtors, the P & L A/c will be debited by :

A
137
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B
240
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C
343
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D
9
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Solution

The correct option is A 137
New reserve to be created = 2,400 x 10/100
= RS-240.
P & L A/c to be debited ;-
= New reserve - (Old reserve - Bad debts)
= 240 - (324 - 221)
= 240 - 103
= Rs-137.

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