Question

On 1st January 2016, provision for doubthul debts account of company showed
aedit balance of 1.600. In 2016, the bad debis amounted to 1.200. On 31
December, 2016 debtors were 58.000 and provision for doubtful debts wat
be made @ 5%. In 2017. bad debts were 2.400. On 31st December, 2017
debtors were * 60,000 and provision for doubtful debts was to be made @5%.lo
2018, bad debts were * 1.600 and 1.000 were recovered from a debtor the
account of which was written off in 2016 as bad debts. On 31-12-2018, debtors
were 45.000on which provision for doubtful debts was to be made 5%
Make necessary journal entries for three years and prepare provision for doubtful
debts account and profit and loss account
lebts account in 2016 72.900
dowhid​

Answer 1

Answer:

Some of the typical items which find a place in the profit and loss account of a firm are depreciation, bad debts and provisions. Enlisting these items on the debit side of the account is indicative of creating a charge on the profits of the firm for that period. If these items are not accounted for in the revenue statement for a period, it would hamper the true and fair view of the accounts. Let us study these concepts in detail.