how to treat bad debts and provision for doubtful debts on debtors . please explain with all the possible ways
Dear Student,
It is not possible for us to list down the impact of all the adjustments. However, I am writing down the accounting treatment for some of them. You can always post us with the specific adjustment that you find difficult to understand.
Let's suppose in Balance Sheet, you are given with
Sundry Debtors: Rs 6,500
Less: Provision Rs 500
Net Debtors: Rs 6,000
Case (a) A provision for doubtful debts is to be created in respect of Sundry Debtors for Rs 375.
Case (b) A provision of 5% is to be created on Sundry Debtors
Case (c) Rs 9,000 is to be provided for doubtful debts.
Case (d) All debtors are considered good.
Case (e) A provision for doubtful debts is to be created in respect of Sundry Debtors for Rs 1,000.
Case (f) A provision of 2% is to be created on Sundry Debtors
Case (g) Write-off bad-debts amounting to Rs 6,000
Case (h) A provision of 10% is to be created on Sundry Debtors
Case (a)
Credit Revaluation A/c by Rs 125
Deduct Rs 375 from Sundry Debtors as New Provision in Balance Sheet
Case (b)
Credit Revaluation A/c by Rs 175
Deduct Rs 325 from Sundry Debtors as New Provision in Balance Sheet
Case (c)
Debit Revaluation A/c by Rs 8,500
Deduct Rs 9,000 from Sundry Debtors as New Provision in Balance Sheet
Case (d)
Credit Revaluation A/c by Rs 500
Show Debtors of 6,500 in Balance Sheet
Case (e)
Debit Revaluation A/c by Rs 500
Deduct Rs 1,000 from Sundry Debtors as New Provision in Balance Sheet
Case (f)
Credit Revaluation A/c by Rs 370
Deduct Rs 130 from Sundry Debtors as New Provision in Balance Sheet
Case (g)
Debit Revaluation A/c by Rs 5,500
Deduct Rs 6,000 from Sundry Debtors as Bad Debts in Balance Sheet
Case (h)
Debit Revaluation A/c by Rs 150
Deduct Rs 650 from Sundry Debtors as New Provision in Balance Sheet
It is not possible for us to list down the impact of all the adjustments. However, I am writing down the accounting treatment for some of them. You can always post us with the specific adjustment that you find difficult to understand.
Let's suppose in Balance Sheet, you are given with
Sundry Debtors: Rs 6,500
Less: Provision Rs 500
Net Debtors: Rs 6,000
Case (a) A provision for doubtful debts is to be created in respect of Sundry Debtors for Rs 375.
Case (b) A provision of 5% is to be created on Sundry Debtors
Case (c) Rs 9,000 is to be provided for doubtful debts.
Case (d) All debtors are considered good.
Case (e) A provision for doubtful debts is to be created in respect of Sundry Debtors for Rs 1,000.
Case (f) A provision of 2% is to be created on Sundry Debtors
Case (g) Write-off bad-debts amounting to Rs 6,000
Case (h) A provision of 10% is to be created on Sundry Debtors
Case (a)
Credit Revaluation A/c by Rs 125
Deduct Rs 375 from Sundry Debtors as New Provision in Balance Sheet
Case (b)
Credit Revaluation A/c by Rs 175
Deduct Rs 325 from Sundry Debtors as New Provision in Balance Sheet
Case (c)
Debit Revaluation A/c by Rs 8,500
Deduct Rs 9,000 from Sundry Debtors as New Provision in Balance Sheet
Case (d)
Credit Revaluation A/c by Rs 500
Show Debtors of 6,500 in Balance Sheet
Case (e)
Debit Revaluation A/c by Rs 500
Deduct Rs 1,000 from Sundry Debtors as New Provision in Balance Sheet
Case (f)
Credit Revaluation A/c by Rs 370
Deduct Rs 130 from Sundry Debtors as New Provision in Balance Sheet
Case (g)
Debit Revaluation A/c by Rs 5,500
Deduct Rs 6,000 from Sundry Debtors as Bad Debts in Balance Sheet
Case (h)
Debit Revaluation A/c by Rs 150
Deduct Rs 650 from Sundry Debtors as New Provision in Balance Sheet