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Answers
Answer :
In Profit and Loss account :
In debit side ;
Bad debts - 3000
Add : New Provision - 5100
________
8,100
In Debit side ;
Discount allowed - 2000
Add : Provision on Discount - 100
Add : Additional discount - 1000
________
3100
In Balance Sheet :
In Asset's Side ;
Sundry Debtors - 51000
Less : Discount on Debtors - 3100
Less : New Provision on Debtors - 5100
________
42,800
Required Journal Entries :
On Discount :
• Profit and loss ac Dr. 100
To Provision for discount on Debtors. 100
( Provision on discount for debtors )
On Bad debts :
• Bad debts ac Dr. 3,000
To Sundry Debtors ac. 3,000
( Provide bad debts )
On provision for bad debts :
• Profit into loss ac Dr. 5100
To Provision for doubtful debts ac 5100
Working Note :
Provision on Discount :
@5% ;
Discount allowed - 2000
= 2000 × 5 / 100
= 10000 / 100
= 100
Provision for doubtful debtors :
@10% ;
Sundry Debtors - 51000
= 51000 × 10 / 100
= 510000 / 100
= 5100