How to treat provision for bad debts if all debtors are good?
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Accounting Tally AuditingFinancial Accounting Peachtree
Debtors:30000. Bad debts:300, provision for bad debt 5% on debtors, discount on debtors 2%. Kindly pass All necessary journal entries with amount?

Kripesh K Nair
Merchandiser - Al Seer Group
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byVENKITARAMAN KRISHNA MOORTHY VRINDAVAN, Project Execution Manager & Accounts Manager, ALI INTERNATIONAL TRADING EST.- 3 years ago
1. Bad Debts A/c Dr 300
To Sundry Debtors 300
(To Write off Bad Debts)
2. Profit and Loss A/c Dr 1485
To Provision for Bad and Doubtful Debts 1485
(Provision @5% of Debtors after writing off Bad Debts)
3. Profit and Loss A/c Dr. 565
To Provision for Discount on Debtors 565
(Provision @2% of Debtors after allowing Bad Debts and Provision for Bad Debts)
Profit and Loss account will be debited with:
1. Bad Debts: 300
2.Provision for Bad and Doubtful debts: 1485
3.Provision for Discount on Debtors: 565
In the Balance Sheet
Debtors will appear as:(30000 less300 less1485 less565 =27650)
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by Atasang Kingsley Ateno , Senior Accountant, Aldana Maritime Services and Contracting - 3 years ago
Firstly, Dr. Debtors Account 29,400
Dr, Discount Allow (2%) 600
Cr. Sales 30,000
To recognised the Bad debt in SOI
Secondly. Dr. Bad Debt 300
Cr. Debtors Account 300
For the provision:
Dr. Bad Debt (5%) 1500
Cr. Allowance for doubtful debt (5%) 1500
It was a good question my dear. Hope i answer your question correctly
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