Pick the odd one ________.

Reserve for discount on creditors is credited to profit & loss account.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Provision for discount on creditors is always made.

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Discount on creditors should be deducted from Sunday creditors in balance sheet.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Both A & C.

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B Provision for discount on creditors is always made.
Provision for Discount on Creditors. When the business makes prompt payments of its debts, it is bound to receive Discounts from its creditors. A Provision for such discount is made in the current year itself so that that the discounts thus earned may be credited to the Profit and Loss Account of the current year.

Suggest Corrections

Similar questions

Q. A Trial Balance contains the following information: Discount received Rs. 2,000, Provision for discount on creditors Rs.1,600. It is desired to maintain a provision for discount on creditors at Rs. 1,100. The amount to be credited to the Profit and Loss Account is __________.

Q. From the following calculate credit purchases during the year.
Creditors as on

1 - 4 - 2013

Rs.

36, 500

Payment made to creditors Rs.

60, 000

Discount given by creditors for early payment Rs.

5, 500

Creditors as on

31 - 3 - 2014

Rs.

21, 000

From the following trial balance, prepare trading account, profit and loss account for the year ended 31st December, 2016.

$\begin{matrix} Particulars & Amt. (Rs.) & Particulars & Amt. (Rs.) Opening Stock & 10, 000 & Sales & 5, 20, 000 Purchases & 3, 00, 000 & Purchases Returns & 10, 000 Debtors & 1, 40, 000 & Creditors & 1, 00, 000 Drawings & 20, 000 & Provision for Bad Debts & 4, 000 Sales Returns & 16, 000 & Bills Payable & 30, 000 Wages & 24, 000 & Bank Overdraft & 20, 000 Salaries & 40, 000 & Capital & 7, 20, 000 Repairs & 12, 000 Bad Debts & 8, 000 Carriage & 4, 000 Discount & 6, 000 Land and Building & 4, 00, 000 Plant and Machinery & 3, 00, 000 Furniture and Fixtures & 80, 000 Cash & 4, 000 Goodwill & 40, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 14, 04, 000 - --------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 14, 04, 000 - --------- - \end{matrix}$

Adjustments:

(i) Closing stock Rs. 40,000

(ii) Further bad debts Rs. 6,000.

(iii) Create a provision for doubtful debts @ 5%.

(iv) Create a provision for discount on debtors and creditors @ 2%.

(v) Change depreciation on plant and machinery and furniture and fixtures @ 10% per annum.

Find out the credit purchases from the following:

	Rs
Balance of creditors April 01, 2016	45,000
Balance of creditors March 31, 2017	36,000
Cash paid to creditors	1,80,000
Cheque issued to creditors	60,000
Cash purchases	75,000
Discount received from creditors	5,400
Discount allowed	5,000
Bills payable given to creditors	12,750
Return outwards	7,500
Bills payable dishonoured	3,000
Bills receivable endorsed to creditors	4,500
Bills receivable endorsed to creditors dishonoured	1,800
Return inwards	3,700

Q. Find out the Credit Purchases from the details given below:

	₹
Balance of Creditors on 1st April 2006	32,000
Balance of Creditors on 31st March, 2007	46,000
Cash paid to Creditors	2,20,000
Cheques issued to Creditors	60,000
Purchases Returns	10,000
Discount received from Creditors	6,600
Cash Purchases	1,15,000
B/P accepted	16,000
B/P Dishonoured	2,000
B/R endorsed to Creditors	7,000
Endorsed B/R dishonoured	3,000

Join BYJU'S Learning Program