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Question

Prepare the bad debts account, provision for account, profit and loss account and balance sheet from the following information as on March 31, 2017

 

Rs

Debtors

80,000

Bad debts

2,000

Provision for doubtful debts

5,000

 

Adjustments

Bad Debts Rs 500 Provision on Debtors @ 3%.


Solution

Profit and Loss Account

Dr.

         

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Bad Debts

2,000

 

Old Provision for Doubtful Debts

5,000

 

Add: Further Bad Debts

500

   

 

 

Add: New Provision for Bad Debts

2,385

4,885

 

 

 

 

 

 

 

 

Balancing figure

 

115

 

 

 

 

 

 

 

 

 

 

 

5,000

 

5,000

 

 

 

 

 

 

               

 

Balance Sheet

Liabilities

Amount

Rs

Assets

Amount

Rs

 

 

 

Debtors 

80,000

 

 

 

 

 

Less: Further Bad Debts

500

 

 

 

 

 

Less: New Provision on Debtors

2,385

77,115

 

 

 

   

 

 

 

 

 

   

 

77,115

 

 

 

 

 

 

 

  

Bad Debts Account

Dr.

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2017

   

2017

   

Dec.31

Balance b/d

2,000

Dec.31

Provision for Doubtful Debts

2,500

 

(as per the Trial Balance)

 

 

 

 

 

 

 

 

 

 

Dec.31

Sundry Debtors

500

 

 

 

 

 

2,500

 

 

2,500

 

 

 

 

 

 

             

 

Provision for Doubtful Debts Account

Dr.

Cr.

Date

Particulars

Amount

Rs

Date

Particulars

Amount

Rs

2017

   

2017

   

Dec.31

Bad Debts

2,500

Jan.01

Balance b/d (Old Provision)

5,000

 

 

 

   

 

Dec.31

Balance b/d

2,385

   

 

 

(New Provision)

 

 

 

 

 

 

 

 

 

 

Dec.31

Profit and Loss

115*

 

 

 

 

(Balancing Figure)

 

 

 

 

 

 

5,000

 

 

5,000

 

 

 

 

 

 

             

 

*Note: In this case, the old provision exceeds the sum total of Bad debts and the New Provision. Thus, the balancing figure is Rs 115 and is calculated as Rs 2,500 + Rs 2,385 – Rs 5,000 = Rs (115)

 


Accountancy
Financial Accounting- II - NCERT Solutions (2019)
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