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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%.


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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