Question 14 Marks
Extract of a Trial Balance as at March 31, 2017 is as follows:
Additional information: A debtor of ₹ 2,000 could not be recovered. It is decided to maintain Provision for Doubtful Debtors @ 5% on Debtors and Provision for Discount at @ 2%. How these adjustments will be shown in Financial Statements?
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Sundry Debtors
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₹ 1,02,000
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Bad Debts
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₹ 1,400
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Provision for doubtful debts
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₹ 3,400
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Answer
Working Notes:
WN 1: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(1,02,000-2,000)\times\frac{5}{100}=5,000$
WN 2: Calculation of Provision for Discount on Debtors,
Provision for Discount on Debtors = (Debtors - Further Bad Debts - Provision for Doubtful Debts) $\times\frac{\text{Rate}}{100}$
$=(1,02,000-2,000-5,000)\times\frac{2}{100}=1,900$
View full question & answer→Working Notes:
WN 1: Calculation of Provision for Doubtful Debts,
Provision for Doubtful Debts $=(\text{Debtors}-\text{Further Bad Debts})\times\frac{\text{Rate}}{100}$
$=(1,02,000-2,000)\times\frac{5}{100}=5,000$
WN 2: Calculation of Provision for Discount on Debtors,
Provision for Discount on Debtors = (Debtors - Further Bad Debts - Provision for Doubtful Debts) $\times\frac{\text{Rate}}{100}$
$=(1,02,000-2,000-5,000)\times\frac{2}{100}=1,900$