29 August 2013
If a business already have Provision for doubtful debts 51000 and during the year business have Bad debts 10000 . Now what to do ?? I want to know that as we make provision against doubtful debts and if bad debts occured , then wht should be done with the old provision and if we want to create a new provision then what to do ?? Give reasons ??
30 August 2013
I explain u with the help of entries:- When u made entry for making provision: Bad debts A/c Dr. 51000 To Provision for Doubtful debt 51000
When actual bad debt occured: Provision for D.B Dr. 10000 To Debtor 10000
and if the total bad debt is only 10000 then: Provision for D.B. Dr. 41000 To Bad debt recovered 41000
and if u think that there are still chances of bad debt then don't write back provision it will appear in liability side amounting to Rs.41000.
05 September 2013
Both P & L a/c dr. To provision and
Bad debt To provision are same entry the only diff is that the above entry is direct. In the second entry what will happen that the bad debt a/c will be closed by p& L a/c. Entry: P& L Dr. To bad Debt A/c
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