Q21Written answer
An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2017 is given below:
| Name of the Account | Debit Amount
₹ |
Credit Amount
₹ |
| Sundry debtors | 50,000 | |
| Bad debts | 6,000 | |
| Provision for doubtful debts | 4,000 |
Additional Information:
- Bad Debts proved bad; however, not recorded amounted to ₹ 2,000.
- Provision is to be maintained at 8% of debtors
Give necessary accounting entries for writing off the bad debts and creating the provision for doubtful debts account. Also, show the necessary accounts.
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Worked solution
The solution is given below:
| Date | Particulars | L.F. | Debit Amount ₹ | Credit Amount ₹ | ||
| Bad Debt A/c | Dr. | 2,000 | ||||
| To Debtors A/c | 2,000 | |||||
| (Further bad debt charged from Debtors Account) | ||||||
| Provision for Doubtful Debt A/c | Dr. | 8,000 | ||||
| To Bad Debt A/c | 8,000 | |||||
| (Amount of bad debt transferred to
Provision for Doubtful Debt Account) |
||||||
| Profit and Loss A/c | Dr. | 7,840 | ||||
| To Provision for Doubtful Debt A/c | 7,840 | |||||
| (Amount of Provision for Doubtful Debt transferred
to Profit and Loss Account) |
||||||
| Bad Debt Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| 2017 | 2017 | ||||||
| Mar.31 | Balance b/d | 6,000 | Mar.31 | Provision for Doubtful | |||
| Mar.31 | Debtors | 2,000 | Debt | 8,000 | |||
| 8,000 | 8,000 | ||||||
| Debtors Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| 2017 | 2017 | ||||||
| Mar.31 | Balance b/d | 50,000 | Mar.31 | Bad Debt | 2,000 | ||
| Mar.31 | Balance c/d | 48,000 | |||||
| 50,000 | 50,000 | ||||||
| Provision for Doubtful Debts Account | |||||||
| Dr. | Cr. | ||||||
| Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
| 2017 | 2017 | ||||||
| 31 Mar. | Bad Debt (6,000 + 2,000) | 8,000 | Apr.01 | Balance b/d | 4,000 | ||
| 31 Mar. | Balance c/d (8% of 50,000-2,000) | 3,840 | Mar.31 | Profit and Loss | 7,840 | ||
| 11,840 | 11,840 | ||||||
Hence, the new provision for bad debts is ₹, 3,840 and the profit and loss account balance is ₹.7840.