Question

The trial balance of a trader on 31^st December 2016 shows debtors as ₹ 50,000.

Adjustments:

1. Write off ₹ 1,000 as bad debts
2. Provide 5% for doubtful debts
3. Provide 2% for discount on debtors

Show how these items will appear in the profit and loss A/c and balance sheet of the trader.

Answer 1

Profit and Loss Account for the
year ended 31^st December 2016

Dr.					Cr.
Particulars		₹	₹	Particulars	₹
To Bad debts		1,000	3,450
Add: Provision for doubtful debts		2,450
To Provision for discount on debtors			931

Balance Sheet as on 31^st December, 2016

Liabilities	₹	Assets	₹	₹
		Sundry debtors	50,000
		Less: Bad debts	1,000
			49,000
		Less: Provision for doubtful debts @ 5%	2,450
			46,550
		Less: Provision for discount on debtors @ 2%	931	45,619