DEBTORS
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
25 April 2010
IF WE MADE PROVISION FOR BAD DEBTS THEN IT WOULD REDUCE THE BALANCE OF DEBTORS AND WOULD GET DEBITED IN P&L A/C.BUT IF IN THE NEXT YEAR BAD DEBTS DOES NOT APPEAR OR APPEARS LESS THAN THE PROVISION THAT WE CREATED ON DEBTORS AND MONEY GOT COLLECTED FROM DEBTORS , THEN WHAT WOULD BE THE TREATEMENT OF THIS EXCESS COLLECTION FROM DEBTORS AS THEY ALREADY GET REDUCED IN THE B/S.
25 April 2010
debtors never pays more, for example there were debtors of 10000 on 01.04.2008 and u make the provision of 1000 on 31.03.2009, it will result in 1000 provision of bad debts of 1000 in p&l and debtors will be reflected by 9000 in Balance sheet, but in the next year if debtors pays 9000/- than first u have to pass a entry in books of accounts to reverse the provision amount made earlier by 500/- and than u should pass the entry for collection of debts.
25 April 2010
IN ABOVE EXAMPLE IF YOU RECD 9000 THAN SIMPLY CREDIT TO DEBTOR AND HIS ACCOUNT WILL BE NIL THEREAFTER ANY MORE IS REALISED THAT IT WILL BE INCOME AND TO BE CREDITED TO P & L
26 April 2010
Provision for bad debt is never reduced from debtors. while making provision, we pass the following entry :
P/L A/c Dr. XX
To Prov. for BD Debts XX
so one effect is that it will appear on Dr. side of P/L A/c and since RDD is a cr. item, it can either appear on liab side or can be deducted from any item on assets side. for presentation purpose, it is shown as deduction from debtors, but entry is not passed in drs. A/c. Next year , drs. opening balance will again be shown at gross value and RDD will be treated as old RDD having a opening cr. balance in the A/c
In P/l A/c what appears is :
Bad debts
+ new RDD
-old RDD
In case u have further doubt, revert back to me.
Regards, CA Shakuntala Chhangani
P/L A/c Dr. XX
To Prov. for BD Debts XX
so one effect is that it will appear on Dr. side of P/L A/c and since RDD is a cr. item, it can either appear on liab side or can be deducted from any item on assets side. for presentation purpose, it is shown as deduction from debtors, but entry is not passed in drs. A/c. Next year , drs. opening balance will again be shown at gross value and RDD will be treated as old RDD having a opening cr. balance in the A/c
In P/l A/c what appears is :
Bad debts
+ new RDD
-old RDD
In case u have further doubt, revert back to me.
Regards, CA Shakuntala Chhangani
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