Journal Entries :
1. Provision for Doubtful Debts A/c Dr. 4,000
To Bad-Debts A/c 4000
(Being bad debt written (3000+1000) from old Provision)
2. Profit and Loss A/c Dr. 6500
To Provision for Doubtful debts A/c 6500
(Being the amount of difference provision charged to Profit and Loss A/c
[7500–(5000–4000)].
The following Ledger accounts may be prepare to interprete the accounting
treatment.
Special Note : If the amount of old Provision for doubtful debts (Trial balance) is more than the total of Bad debts (Old + New) and New Provision for doubtful debts.
Illustration No. 8.
Additional information : (i) Further bad debts 2,500.
(ii) Create a provision for doubtful debts @5% on Sundry debtors.
CBSE Accountancy Class XI ( By Mr. Aniruddh Maheshwari )
Email Id : [email protected]