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P & L Appropriation A/c ..........Dr.
To Provision for income tax A/c
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A firm had the following Balances on 1 January 1994:
(i) Provision for bad and doubtful debts Rs 2,500
(ii) Provision for discounts on debtors Rs 1,200
(iii) Provision for discounts on creditors Rs 1,000
During the year, bad debts amounted to Rs 2,000, discounts
allowed were Rs 100 and discounts received were Rs 200.
During 1995 bad debts amounting to Rs l,000 were written off
while discounts allowed and received were
Rs 2,000 and Rs 5,000 respectively.
Total debtors on 31 December, 1995 were Rs 48,000 before
writing off bad debts, but after allowing discounts. On
31 December, 1995, this amount was Rs 19,000 after writing
off the bad debts, but before allowing discounts.
Total creditors on these two dates were Rs 20,000 and Rs
It is the firmís policy to maintain a provision of 5%
against bad and doubtful debts and 2% for discount on debtors
and a provisions of 3% for discount on creditors.
Show the accounts relating to provisions on debtors and
provisions on creditors for the year 1994 and 1995.
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