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Please explain treatment of provision for bad debts. . .
I'm Confused with the Treatment of provision for bad debts, please explain, where it comes in P&L A/c, and what is new provision and old provisions.
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Suppose you make an provision for bad debts in the current year for say Rs 100000. Now in the subseuent year the balance of 100000 gets c/f. In the subsequent year you write-off 300000 as bad debts, then the bad debts shud first be adjusted against the old provision for bad debts. now there's shoftfall of 200000, so you will will be requrie to make new provisino of Rs 2 lacs by debit to P&L by Rs 2lacs.
provision for Bad debt, Shows dr. or Cr. Balance?
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