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How to treat the provision for bad debts which appear on
credit side of the p&L A/c.
- 6 Answers
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Answer / surya kumar
At the first step the provision for doubtful debt should be
shown on the debit side of the frofit & loss account
correspondingly on the liability side of the Balance Sheet
(normally it is being netted off against Sundry Debtors for
disclosure purpose). After 2-3 years when the organisation
feels that there is no chance of recovery then the
provision shoud be written off against the amout
recoverable from debtors .
The case is just reverse in case of sundry creditors ,
whose demand is int acknowledge or whose whereabout is not
known.
| Is This Answer Correct ? | 11 Yes | 2 No |
Answer / kaatje rère
Provision for Bad Debts should appear as a credit on the
Balance Sheet, and Bad Debts written off is an expense item
on the Profit and Loss Account
| Is This Answer Correct ? | 16 Yes | 9 No |
write entry will be of above q.
bank/cash dr xxxxx
to bed debts recoverable xxxxx
| Is This Answer Correct ? | 2 Yes | 2 No |
Answer / amjad faqih
Hello every one,
I do agree with Mr. Surya kumar but want to add little more
in answer once you received your money after 2-3-4 years
then what would be the entry as following.
cash/bank ----- Dr XXXX
To provision for bad deb (P&L) ----Cr XXXX
| Is This Answer Correct ? | 0 Yes | 3 No |
Answer / chaitanya
Bad debts is the cause for creating provision for
baddebts,when a person feels the amount cannot be returned
then its going to be a baddebt,as a precautionary measure
he opens a provision for baddebts for fullfilling a minimum
amount with himself.so obviously we hae to show baddebts
on debit side of P&l a/c and provisions on credit side of
p&l a/c.
| Is This Answer Correct ? | 10 Yes | 15 No |
Answer / shiva kumar 9848083705
PROVISION FOR BAD DEBTS IS GAIN OF THE COMPANY IT IS IN
APPEARS IN CREDIT SIDE OF THE PROFIT AND LOSS ACCOUNT
BECAUSE RULE OF NOMINAL ACCOUNT DEBIT ALL EXP AND LOSSES
CREDIT ALL INCOMES AND GAINS.
REGARDS S.SHIVA KUMAR
9848083705
| Is This Answer Correct ? | 16 Yes | 22 No |
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