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provison for doubtful debts?

ViveK (.) (312 Points)

06 April 2010

hi all

what is the treatment of provision of doubtful debts shown in adjustments

language is "debtors includes Rs 120000 due for more than 6 months out of which provision has been made for doubtful debts at Rs 20000 during year

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6 Replies

sudhir rawal (B.COM/PCC/ARTICLE/'O'LEVEL) (314 Points)
Replied 06 April 2010

DEAR VIVEK JAIN

YOUR ENTRY AS PER PRACTICAL APPROACH

P&L A/C DR 20000

TO PROVISION FOR BAD DEBTS 20000

PROVISION FOR BAD DEBTS 20000

TO DEBTORS 20000

BECAUSE PROVISIONS FOR BAD DEBTS ARE COMES WITH COMPOSITE VALUE AND IT'S MADE OUT OF P&L FROM DEBTORS IT'S ADJUST...

IF I WRONG PLS CORRECT ME ALL TYPE OF COMMENTS ARE WELCOME

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ViveK (.) (312 Points)
Replied 06 April 2010

provision for doubtful debts is not debited agaist debtors its just deducted from it to make balance sheet equal or else u can show it in liabilaty side but as common practice it is shown in asset side as deduction

you are very much right about the adjustment but as in final accounts chapter of company accounts i have seen a problem in which provision is not deducted from balance sheet but then also it is tallied

ViveK (.) (312 Points)
Replied 06 April 2010

my question is

i have seen a solved problem(company final accounts padhuka's book) and in that problem doubtful debts are not subtracted from debtors(shown in adjustment) in balance sheet but are charged in p&l account even though it tallied

ViveK (.) (312 Points)
Replied 07 April 2010

resolved thanx anyways :)

Payal Gupta (article assistant) (176 Points)
Replied 11 April 2010

can u provide the question once again & also write all the given items relating to this adjustment

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ViveK (.) (312 Points)
Replied 11 April 2010

its a very lengthy ques. to type(but if u want it i can post that or if u have paduka's book for accounting i can give u its page, pronlem no etc)

it was just me who was doing it wrong

actually they was subtracting provision from other expenses and showing them separately(with a wrong working note) but when i tried it solving myself without considering the provision then our answer was same then i just went through the solution carefully then it showed that where i went wrong.