Question

The trial balance on March 31, 2016, shows the following:

Sundry debtors ₹ 30,000; Bad debts ₹ 1,200

It is found that 3% of sundry debtors is doubtful of recovery and is to be provided for. Pass journal entry for the amount of provision and also show how it would appear in the profit and loss account and balance sheet.

Answer 1

Journal entry-

Date	Particulars	L.F.	Debit ₹	Credit ₹
31.03.2016	Profit and loss A/c   Dr.    To Provision for doubtful debts A/c (Provision for doubtful debts @ 3%)		900	900

Profit and Loss Account for
the year ended 31.03.2016

Dr.                                                                             Cr.

Particulars	₹	₹	Particulars	₹
To Bad debts	1,200	2,100
Add: Provision for doubtful debts	900

Balance Sheet as on 31.03.2016

Liabilities	₹	Assets	₹	₹
		Sundry debtors	30,000	29,100
		Less: Provision for doubtful debts	900