Question

What is meant by provision for doubtful debts? How are the relevant accounts
prepared and what journal entries are recorded in final accounts? How is the
amount for provision for doubtful debts calculated?

Answer 1

Explanation:

Provision for bad debts is the amount earmarked or set apart from out of the profits of an accounting period. The amount to be earmarked is based on a percentage of the amount due from sundry debtors. The amount of sundry debtors for this purpose is the balance left on the account after deducting bad debts.