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%.

Answer 1

$\text{Dr.}\text{Bad Debts Account}\text{Cr.}$

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}\\ 2011& & & & 2011& & & \\ \text{Dec 31}& \text{Balance b/d}& & 2,000& \text{Dec 31}& \text{Provision for}& & \\ \text{Dec 31}& \text{Debtors A/c}& & 500& & \text{Bad Debts A/c}& & 2,500\\ & & & \overline{\underset{–}{\underset{–}{2,500}}}& & & & \overline{\underset{–}{\underset{–}{2,500}}}\end{array}$

$\text{Dr.}\text{Provision for Bad Debts Account}\text{Cr.}$

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}\\ 2011& & & & 2011& & & \\ & \text{Bad Debts A/c}& & 2,500& & \text{Balance b/d (Old Provision)}& & 5,000\\ & \text{Profit and Loss A/c (b/f)}& & 115& & & & \\ & \text{Balance c/d}@3\%\text{on}79,500& & 2,385& & & & \\ & & & \overline{\underset{–}{\underset{–}{5,000}}}& & & & \overline{\underset{–}{\underset{–}{5000}}}\end{array}$

Balance Sheet

$\begin{array}{cccccccc}\text{Date}& \text{Capital and Liabilities}& & \text{Amt. (Rs.)}& \text{Date}& \text{Assets}& & \text{Amt.(Rs.)}\\ & & & & & \text{Debtors}80,000& & \\ & & & & & (-)\text{Bad}& & \\ & & & & & \text{Debts}500& & \\ & & & & & (-)\text{Provision}& & \\ & & & & & \text{for Bad}& & \\ & & & & & \text{Debts}\underset{–}{2,385}& & 77,115\end{array}$

$\text{Dr.}\text{Profit and Loss Account}\text{Cr.}$

$\begin{array}{cccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Particulars}& \text{Amt. (Rs.)}\\ \text{Bad Debts}2,000& & \text{Old Provision for Doubtful}& \\ (+)\text{Further Bad}& & \text{Debts}& 5,000\\ \text{Debts}500& & & \\ (+)NewProvision& & & \\ \text{for Bad Debts}\underset{–}{2,385}& 4,885& & \\ \text{Balancing Figure}& 115& & \\ & \overline{\underset{–}{\underset{–}{5,000}}}& & \overline{\underset{–}{\underset{–}{5,000}}}\end{array}$