# Reserve & provisions

Ashish (Finance guy) (21 Points)

31 March 2023

Hi, while solving the below problem related to “Reserve & provisions", I thought point b “10,000 due on sale of furniture “(highlighted in bold) should be added to the debtors as it will increase the debtors, however it has been deducted from the Sundary Debtors.

Can anyone explain why it has been deducted from debtors and not added as entry would have been

Debtors ac dv 10000

To Furniture ac. 10000

Problem:

Trial Balance as on 31st December, 2013 of Mr. S. Saha contains the following items :

Provision for Doubtful Debts - 15000

Bad Debts - 10,000

Sundry Debtors -1,40,000

On enquiry it was ascertained that Debtors include :

(a) 15,000 due from Mr. B. Sen and Creditors include 20,000 due to Mr. B. Sen.

(b) 10,000 due on account of sale of Furniture.

(c) Bad Debts - 7,500.

Prepare Provision for Doubtful Debts Account and Bad Debts Account.

Provision for Doubtful Debts is to be created at 5% on Trade Debtors.

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Below is the part of solution where amount due on sale of furniture is being deducted from Sundary Debtors

Working Note : (1) Calculation of Provision for Doubtful Debts ~

Sundry Debtors

1,40,000

Less: Mutual Set-off (Mr. B. Sen)

15,000

Less: Due on account of Sale of Furniture

10,000

Less: Further Bad Debts

7,500

1,07,500