Question

Sundry Debtors Rs. 50,000, Additional Bad debts Rs. 5,000 Provision for doubtful debts @ 10%. The amount of Provision for bad debts Will
be:
Rs. 4,500
0 Rs. 5,000
0 Rs. 4,000
Rs. 5.500
Go to question: 13

Answer 1

Answer:

The answer is Rs. 5000.

Given :

• Sundry debtors = 50000

• Provision for bad debts = 10%

• Additional bad debts = 5000.

Then ,

Provision for bad

Debts =. sundry debtors ×

rate / 100

= 50,000 × 10 / 100

= 5000.

So, Provision for bad debts is Rs. 5000.

• Provision for Bad and Doubtful Debts

It is a provision created to meet the loss, if the debtors fail to pay the whole or part of the debts owned by them. The amount required for doubtful debts is kept by charging the amount to the profit and loss account. On keeping the provision for doubtful debts, the entry is ;

Profit and loss a/c Dr

To provision for doubtful debts a/c

The double effect of provision for doubtful debts is ;

1. It is shown in the debit side of profit and loss account.
2. It is deducted from debtors in the balance sheet.

Answer 2

0RS.5000

Explanation:

we should calculate the sundry debtors we can find provision for bad debts