What is journal entry to create the Provision for Bad &
Doubtful debts?




Answers were Sorted based on User's Feedback



What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / rupali

Bad Debts A/c dr.
To Provision for Bad & Doubtful Debts Cr.

Is This Answer Correct ?    143 Yes 62 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / k. phalguna rao

1) Bad Debts means we can expect to not receive the money
(cash/bank) from the customer (sundry Debtors) towards
goods sold to him so if the money is not received from the
customer,it is loss to the company hence losses to be
debited as Bad debits and credit to the customer (Sundry
Debtors - Current Asset) hence the current asset value
decreased
2) Provision for Bad Debts: In the business we can not
expect how much will be the bad debts because to increase
our sales and to competite with opponents we have to give
the goods / services in credit hence to protect from this
risk every compnay made a provision for Bad Debts from
Sundry Debitors

Note: if Bad Debits happen in the current financial year
first we should be adjusted from the Provision for Bad
Debts, if the bad debts crossess than provison for bad
debts then balance amount reduced from Sundry Debtors

suppose sundry debtors worth 50000.00
allow 5% on debtors for provision for bad dabts & 10% for
Bad dabts in the year end after adjust from the provision

Provision for Bad Debits A/c Dr. 2500 (50000x5% = 2500.00)
To Sundra Debtors 2500

Actual Bad Debts = 50000 x 10% = 5000.00

(BD=5000-2500(PBD) = Balance Bad Debts is 2500

Bad Debts A/c Dr. 2500
To Sundry Debtors 2500

Is This Answer Correct ?    62 Yes 19 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / premsundar

You should first recognize that a Provision is made just to hold back the profits you might otherwise distribute as a dividend Distribution of dividends de-recognizing possible losses would amount to 'repayment of capital'; a process that can be gone through only under the provisions of Sec 100 of the cos Act
The entry
Doubtful debts a/c Dr
To Provision for Bad and Doubtful debts
Year end
P&L a/c Dr
To Doubtful debts a/c
( This is a Closing entry)
In the Balance sheet, the Provision for bad and Doubtful debts a/c is shown as a deduction from Sundry debtor's a/c This satisfies the MATCHING PRINCIPLE and the concept of Prudence
When Bad Debts are actually incurred later they need to be set off against the Provision already created for the purpose
Bad debts a/c Dr---
To Sundry Debtors a/c----
Prov for Bad & Doubtful debts Dr---
To Bad debts a/c

Recognize that P&L a/cdoes not suffer a debit again
To

Is This Answer Correct ?    33 Yes 4 No




What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / murli vohra

The correct entry to create provision for Bad Debt is

P&l a/c- dr
To Provision for bad debt

Is This Answer Correct ?    51 Yes 25 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / arun

P&L ac dr
To prov for bad debts ac

Is This Answer Correct ?    29 Yes 4 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / karthik

Profit and loss account...dr
To provision for doubtful debts a/c

Is This Answer Correct ?    18 Yes 3 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / prasanna

Profte and loss account Dr
To Provision for bad debts

Being amount in P and L account is reduced in order to maintain the provisions

Is This Answer Correct ?    5 Yes 0 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / kapil kumar

P&l account debit
To Provision for bad debts
(Being provision is created for bad debts)

Is This Answer Correct ?    4 Yes 0 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / kittu

Profit and loss a/c DR
To provision for debate A/c

Is This Answer Correct ?    5 Yes 3 No

What is journal entry to create the Provision for Bad & Doubtful debts?..

Answer / sougata dasgupta

Provision for bad debt A/C.......Dr
To Sundry debtors A/C
Being provision charged to sundry debtors in order to meet future losses for bad debts

Is This Answer Correct ?    2 Yes 2 No

Post New Answer



More Accounting General Interview Questions

What is the accounting treatment for goods taken from business for office use

2 Answers  


What is difference between debit note and Proforma Invoice

3 Answers   ICA,


how can we do salary entry. inwhich gross salary, da, hrs, pf esi etc. included. tell me what is the journal entry for this type of question.

3 Answers  


what is profit and loss(dr) in cash flow statement?

0 Answers  


what is ctt

3 Answers   Bank Of India,






Why is an ‘Alternate Payee’ used

1 Answers  


genteral interview question for accounting

2 Answers   Capital IQ,


5. What would be the pay-back period of a project requiring initial investment of $10,000/- and expected to generate a cash flow of $ 2,000/- per year?

1 Answers  


cash with drawn from bank with issuing self check vide ch no.123456 how to enter in sap. please send answer anyone this is very helpful to me

0 Answers  


why the provision is created in profit and lose account

1 Answers   Wipro,


ESI payable in the year 2010 was Rs.11000 but not accounted for by mistake in that year.It was paid in the year 2013-14. Then what will be the journal entry?

3 Answers  


What is the criteria to calculate GDP growth?

1 Answers  






Categories