Provision for doubtful debts is _________________.

Debited to Sundry Debtors Account

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Credited to Sundry Debtors Account

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Debited to Bad Debts Account

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Debited to Profit & Loss Account

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Solution

The correct option is C Debited to Profit & Loss Account
The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. Later, when you identify a specific customer invoice that is not going to be paid, eliminate it against the provision for doubtful debts.

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Following information is given in trail balance

$\begin{matrix} Bad debt & R s . 3, 000 Provision for bad debts & R s . 3, 500 Debtors & R s . 40, 000 \end{matrix}$

Additional Information:

It is desired to make a provision for doubtful debts @10% on debtors. Find the amount to be debited to profit and loss account.

Name of Account	Debit Amt. (Rs)	Credit Amt. (Rs)
Sundry debtors	$50, 000$
Bad debts	$6, 000$
Provision for doubtful debts		$4, 000$

2, 000

8 %

	Dr. (₹)	Cr. (₹)
Sundry Debtors (including Dewan for dishonoured bill of ₹ 20,000)	4,80,000	–
Provision for Doubtful Debts	–	24,000
Bad Debts	10,000	–

\frac{3}{4} th

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