25 April 2010
IF WE MADE PROVISION FOR BAD DEBTS THEN IT WOULD REDUCE THE BALANCE OF DEBTORS AND WOULD GET DEBITED IN P&L A/C.BUT IF IN THE NEXT YEAR BAD DEBTS DOES NOT APPEAR OR APPEARS LESS THAN THE PROVISION THAT WE CREATED ON DEBTORS AND MONEY GOT COLLECTED FROM DEBTORS , THEN WHAT WOULD BE THE TREATEMENT OF THIS EXCESS COLLECTION FROM DEBTORS AS THEY ALREADY GET REDUCED IN THE B/S.
25 April 2010
debtors never pays more, for example there were debtors of 10000 on 01.04.2008 and u make the provision of 1000 on 31.03.2009, it will result in 1000 provision of bad debts of 1000 in p&l and debtors will be reflected by 9000 in Balance sheet, but in the next year if debtors pays 9000/- than first u have to pass a entry in books of accounts to reverse the provision amount made earlier by 500/- and than u should pass the entry for collection of debts.
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