Question

Adjustments:

Further bad debts Rs.1000 and Provision for doubtful debts @5% on debtors and discount on debtors @2%.

How to calculate in profit and loss account debit side

Plz tell with explanation

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Answer 1

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explanation-----

1> Bad debt - Bad debt is undoubtedly a loss to the firm and is therefore written on the debit side of the p\l A/c.
Note: If Bad debt are given in adjustment they will also shown at one more place that is - deducted from debtor on the Asset side of the balance sheet.

2> Provision for bad and doubtful debt- this provision is created to cover any possible loss on account of bad debt likely to occur in future..
It is deducted from Sundry debtor and Add on Debit Side of profit and loss account..

3> Discount on debtor is the actual loss of firm not to debtor so, it is subtracted from sundry debtors and then simply shown on Debit Side of profit and loss account

NOTE - All this process is to be done sequence by sequence.