Difficult journal entry

As on 30.03.2012 Debtors Account .............Dr. 5,00,000.00

                                  To, Credit Sales Account 5,00,000 00

As on 02.04.2012 Bank Acconut ................................Dr.  4,50,000.00

                                 Discount Allowed Account..........Dr.       50,000.00

                                  To, Debtors Account                            5,00,000.00

Agree With Sanjay

Originally posted by : Sanjay Bag
	As on 30.03.2012 Debtors Account .............Dr. 5,00,000.00                                   To, Credit Sales Account 5,00,000 00 As on 02.04.2012 Bank Acconut ................................Dr.  4,50,000.00                                  Discount Allowed Account..........Dr.       50,000.00                                   To, Debtors Account                            5,00,000.00

 

But we have to make provision for doubtfull debts how will we pass journal entry for provision.

Dear Akash,

Amount will be lying in name of debtor and why you need provision entry for that.

 

Hi, Akash we need not me make any provision for doubtful debt, because it is a good debt. So there is no question of being doubtful. To consider a debt as doubtful you have to wait for certain minimum period.

As u said debtor paid amount on 2nd april to get benefit of discount.. Why need provision for doubtful debt? ? Account was settled when he paid amount after deducting discount declared by seller.. However provision for discount on debtor..may possible..but not very sure on this case..still trying... Experts plz Correct me if i m wrong,, .. When sale took place 1)Debtor a/c Dr. 500000 To sales a/c 500000 2) when seller makes provison @ 10% for discount on debtor --- P/L a/c Dr. 50000 To provision for discount a/c Dr 50000 3) when debtor paid and discount allowed.. CASH/BANK a/c Dr. 450000 Provision for discount a/c Dr. 50000 To Debtor a/c 500000.. is it possible..??

You are wrong Mr Devsh. Do not overlook things. 

The question was resolved correctly by others.

 

 

Dear shibu sir,

I agree with you.

 

But why the provision should not be made. Please clarify.

Dear Mr.Nagrajan,

Can you explain full entry with provision of discount.

thanks in advance.

 

Till 2nd April, the receipt of money is not sure. Discount is allowed  for receipt of money which is an expense for the FY 2012-13. Hence no provision of dicount. 

I think Devesh is correct, a provision for discount may be done.

Clarification regarding Provision for Discount Allowed: Dear all, if we know we have to pay discount if the party made his payment within the stipulated then I think in a conservative way it is more suitable to make a provision for discount .

DISCOUNT PROVISION SHOULD BE MADE AS U DONT KNW ON 30 APRIL THAT DEBTORS WILL PAY BEFORE 5 APRIL

SANJAY SIR HAS CORRECTLY SOLVED IT