rahul (student) (62 Points)
15 May 2015
Deepak Gupta
(CA Student)
(15922 Points)
Replied 15 May 2015
1. Closing balance of sundry debtors = Rs. 6,30,000
.
2. Closing provision for doubtful debts to be maintained @ 10% = Rs. 63,000
.
3. Opening provision for doubtful debts = Rs. 51,000
.
4. Additional provision to be maintained = Rs. 12,000 (2-3)
.
Journal Entry:
.
Profit and Loss A/c ........Dr. 12,000
.
To Provision for doubtful debts 12,000
.
(Being additional provision on doubtful debts maintained @ 10%)
.
- Question from Advanced Accounting, CA-PCC [May 2008]
CMA Poornima Madhava
(CMA)
(13112 Points)
Replied 15 May 2015
Right, in addition to what is suggested by Deepak, you need to debit ₹10k to provision a/c and credit debtors and increase the provision for current year to this extent.
Jishnu Surendran
(Finance Manager)
(312 Points)
Replied 16 May 2015
to write off rs.10000 as bad debts...
Provision for Bad debts a/c dr. 10000
To Sundry Debtors a/c 10000
( now closing value of debtors is 620000 )
provide 10 % on closing value
Profit & Loss a/c dr. 21000 ( 62000 - ( 51000 - 10000) )
To Provision for bad debts a/c 21000
Note : considering closing value of debtors rs. 630000 is before bad debt w/off.....if it is considered after write off......then the current year additional provision will be rs. 22000 instead of 21000...........i have difference in opinion with rs. 12000 as additional provision because, after you provide for an expense you can only write off the actual incidence of the same against that provision only......
Mohit Garg
(Chartered Accountant)
(50 Points)
Replied 16 May 2015
I m totally agree wid Jishnu Surendran
"to write off rs.10000 as bad debts... Provision for Bad debts a/c dr. 10000 To Sundry Debtors a/c 10000 ( now closing value of debtors is 620000 ) provide 10 % on closing value Profit & Loss a/c dr. 21000 ( 62000 - ( 51000 - 10000) ) To Provision for bad debts a/c 21000 Note : considering closing value of debtors rs. 630000 is before bad debt w/off.....if it is considered after write off......then the current year additional provision will be rs. 22000 instead of 21000...........i have difference in opinion with rs. 12000 as additional provision because, after you provide for an expense you can only write off the actual incidence of the same against that provision only....."
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