Question

State whether Revaluation Account is debited or credited to record the increase in Provision for Doubtful Debts.

Answer 1

Provision for doubtful debts is an estimate for the amount of bad debts that will arise from debtors that have been issued but not yet collected. An increase in this provision is an increase in the liability of the firm and hence, is recorded by debiting the Revaluation account.

The accounting entry is:

Revaluation a/c...... Dr.

To Provision for Doubtful Debts