1. Rahul’s trial balance provide you the following information : Debtors ₹ 80,000 Bad debts ₹ 2,000 Provision for doubtful debts ₹ 4,000 It is desired to maintain a provision for bad debts of ₹ 1,000. State the amount to be debited/credited in profit and loss
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The amount which is to be credited in the Profit and Loss A/c is Rs 1,000
Explanation:
The provision for doubtful debts is the account which takes into account the estimated bad debt amount which will arise from the accounts receivable and that have been issued but not collected yet.
Making the account of Provision for Bad debts which is as:
Provision for bad debts
Dr side
Opening balance Rs 4,000
Total Rs 4,000
Cr side
Bad debt Rs 2,000
Profit and Loss A/c Rs 1,000
Closing balance Rs 1,000
Total Rs 4,000
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