The Bad Debts figure in the trial balance is 170.
The following info is to be taken into account: A
provision for bad debts of 5% of debtors is to be created
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Answer Posted / dr. sarveshwar pande
If any additional Bad debts is to be written off, then this would be deducted from the debtors figure. Next the provision of 5% would be computed on the debtors figure which would now give the adjusted figure for debtors.
Eg. Bad debts in Trial balance is Rs100. Debtors in Trial balance were Rs5,200. Additional details: 1) Write off additional bad debts Rs200. 2) Provide a provision for Doubtful debts @ 5%.
Step 1: Debtors - New Bad debts only (Rs5,200 - Rs200 = Rs5,000)
Step 2: Provide 5% on New Debtors (5% of Rs5,000 = Rs250)
Step 3: Bad debts in P& L would be (Rs100+Rs200 = Rs300)
Step 4: Doubtful debts in P& L would be Rs250
Step 5: Debtors in Balance sheet would be:( Rs5,000-Rs250 = Rs4,750)
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