The accounts of Lakshmi traders showed the following balance on 31st March, 2016.
Sundry debtors Rs. 60,000; Bad debts Rs. 2,000
Provision for doubtful debts Rs. 4,200
At the time of preparation of final accounts on 31st March, it was found that out of sundry debtors, Rs. 1,000 will be irrecoverable. It was decided to create a provision of 2% on debtors to meet any future possible bad debts.
Pass necessary journal entries and show how these items would appear in the final accounts.
