When it is certain that a debt won’t be recovered, which of the following is correct?

Provision for bad debt is credited

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Accounts receivable is credited

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Bad debts are credited

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Sales are debited

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Solution

The correct option is B
Accounts receivable is credited

Accounts receivable is credited in this case.

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Rahul's trial balance provide you the following information:

$\begin{matrix} Debtors & R s . 80, 000 Bad debts & R s . 2, 000 Provision for bad debts & R s . 4, 000 \end{matrix}$

It is desired to maintain a provision for bad debts of Rs. 1,000. State the amount to be debited/credited in profit and loss account.

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