Question

CS-6. Using transfer of bad debt to provision system Following pieces of information are provided to you: a) Bad debt written off for the year b) The balance with debtors at the end of the year c) Debited to Profit & loss account d) Closing Provision for doubtful debts Required: Provision for doubtful debt A/c. [Hints: Profit & loss A/c is recorded in credit side of provision for bad debts A/el ......Rs. 3,000. .....Rs. 80,000. ..Rs. 1,200. ..Rs. 4,000.​

Answer 1

The provision for doubtful debt is Rs. 80,200.

Step-by-step explanation:

Provision for doubtful debt is a system used in accounting to account for potential bad debts. It involves transferring the bad debt amount to a provision account.

To calculate the provision for doubtful debts, we need to consider the bad debt written off for the year, the balance with debtors at the end of the year, and the amount debited to the Profit & Loss account.

In this case, the information provided is:

- Bad debt written off for the year: Rs. 3,000
- Balance with debtors at the end of the year: Rs. 80,000
- Amount debited to Profit & Loss account: Rs. 1,200
- Closing Provision for doubtful debts: Rs. 4,000

To calculate the provision for doubtful debts, we need to subtract the closing provision from the sum of bad debt written off, balance with debtors, and amount debited to the Profit & Loss account.

Using the given values:

- Provision for doubtful debts = Rs. 3,000 + Rs. 80,000 + Rs. 1,200 - Rs. 4,000
- Provision for doubtful debts = Rs. 80,200