Question

Following balances are taken from the Trial Balance of a trader as at 31st March, 2019:

You are required to show extracts of Profit and Loss Account for the year ending 31st March, 2019 and from the Balance Sheet as on that date after taking into consideration the following:
(i) Make a Provision for Doubtful Debts @`3%` of the Sundry Debtors.
(ii) Make a Provision for Discount on Debtors @`2%`.

Answer 1

Notes:
1. Bad Debts appearing in the Trial Balance has already been adjusted in the Sundry Debtors.
2. Closing (New) Provision for Doubtful debts is less than the opening (old) provision for doubtful debts after adjustment of bad debts, the difference, i.e., Rs 1,000 is credited to Profit and Loss Account.