Final accounts

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umesh (Querist)
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29 August 2013 If a business already have Provision for doubtful debts 51000 and during the year business have Bad debts 10000 .
Now what to do ??
I want to know that as we make provision against doubtful debts and if bad debts occured , then wht should be done with the old provision and if we want to create a new provision then what to do ??
Give reasons ??

Arun

Arun (Expert)
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30 August 2013 I explain u with the help of entries:-
When u made entry for making provision:
Bad debts A/c Dr. 51000
To Provision for Doubtful debt 51000

When actual bad debt occured:
Provision for D.B Dr. 10000
To Debtor 10000

and if the total bad debt is only 10000 then:
Provision for D.B. Dr. 41000
To Bad debt recovered 41000

and if u think that there are still chances of bad debt then don't write back provision it will appear in liability side amounting to Rs.41000.

umesh

umesh (Querist)
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30 August 2013 but entry for provision is :-
p and L a/c dr.
to provision ??????

umesh

umesh (Querist)
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30 August 2013 please tell i m confused regarding this ??

Arun

Arun (Expert)
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05 September 2013 Both
P & L a/c dr.
To provision
and

Bad debt
To provision
are same entry the only diff is that the above entry is direct. In the second entry what will happen that the bad debt a/c will be closed by p& L a/c. Entry:
P& L Dr.
To bad Debt A/c

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