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Question

Prepare the bad debts account, provision for bad debts account, profit and loss account and balance sheet from the following information as on December 31, 2011.

Rs.

Debtors 80,000

Bad Debtors 2,000

Provision for bad debts 5,000

Adjustments:

Bad debts Rs. 500, Provision on debtors @ 3%.

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Solution

Dr. Bad Debts Account Cr.

DateParticularsJ.F.Amt. (Rs)DateParticularsJ.F.Amt. (Rs.)20112011Dec 31 Balance b/d 2,000Dec 31 Provision forDec 31 Debtors A/c 500 Bad Debts A/c 2,500¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 2,500––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 2,500––––––––––––––––

Dr. Provision for Bad Debts Account Cr.

DateParticularsJ.F.Amt. (Rs)DateParticularsJ.F.Amt. (Rs.)20112011 Bad Debts A/c2,500 Balance b/d (Old Provision)5,000 Profit and Loss A/c (b/f)115 Balance c/d @ 3% on 79,5002,385¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 5,000––––––––––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 5000––––––––––––––

Balance Sheet

DateCapital and LiabilitiesAmt. (Rs.)DateAssetsAmt.(Rs.)Debtors 80,000()Bad Debts 500()Provision for Bad Debts 2,385––––77,115

Dr. Profit and Loss Account Cr.

ParticularsAmt. (Rs.)ParticularsAmt. (Rs.) Bad Debts 2,000 Old Provision for Doubtful(+)Further Bad Debts5,000 Debts 500(+) New Provision for Bad Debts 2,385–––– 4,885 Balancing Figure 115 ¯¯¯¯¯¯¯¯¯¯¯¯¯5,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ 5,000––––––––––––––––


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