Provision for doubtful debts

1. Closing balance of sundry debtors = Rs. 6,30,000
.
2. Closing provision for doubtful debts to be maintained @ 10% = Rs. 63,000
.
3. Opening provision for doubtful debts = Rs. 51,000
.
4. Additional provision to be maintained = Rs. 12,000 (2-3)
.
Journal Entry:
.
Profit and Loss A/c ........Dr. 12,000
.
To Provision for doubtful debts           12,000
.
(Being additional provision on doubtful debts maintained @ 10%)
.
- Question from Advanced Accounting, CA-PCC [May 2008]

Right, in addition to what is suggested by Deepak, you need to debit ₹10k to provision a/c and credit debtors and increase the provision for current year to this extent.

to write off rs.10000 as bad debts...

Provision for Bad debts a/c dr. 10000

                 To Sundry Debtors a/c 10000

( now closing value of debtors is 620000 )

provide 10 % on closing value

Profit & Loss a/c dr. 21000 ( 62000 - ( 51000 - 10000) )

          To Provision for bad debts a/c  21000

Note : considering closing value of debtors rs. 630000 is before bad debt w/off.....if it is considered after write off......then the current year additional provision will be rs. 22000 instead of 21000...........i have difference in opinion with rs. 12000 as additional provision because, after you provide for an expense you can only write off the actual incidence of the same against that provision only......

I m totally agree wid Jishnu Surendran
 

"to write off rs.10000 as bad debts... Provision for Bad debts a/c dr. 10000                  To Sundry Debtors a/c 10000 ( now closing value of debtors is 620000 ) provide 10 % on closing value Profit & Loss a/c dr. 21000 ( 62000 - ( 51000 - 10000) )           To Provision for bad debts a/c  21000 Note : considering closing value of debtors rs. 630000 is before bad debt w/off.....if it is considered after write off......then the current year additional provision will be rs. 22000 instead of 21000...........i have difference in opinion with rs. 12000 as additional provision because, after you provide for an expense you can only write off the actual incidence of the same against that provision only....."