Professional Documents
Culture Documents
When ever seller incurres a loss then immediately he pass the entry of bad debt by debiting it. And
crediting the sundry debtors account.in case ofBad Debt seller closes the account of customer. But
sometimes after writing off , bad debt if any amount is received then it is called the recovery of bad
debt.
When Provision for bad and Doubtful debt accounts is maintained then for closing the bad debt
recovery following entry is passed.
( Bad Debt is adjusted with PBDD a/c .and Bad debt recovery a/c is closed )
To P/L Account
Prob 1:
On 1.1.89, A& co. had a provision for bad debts of Rs. 10880. The Bad debts during the year 1989
amounted to Rs. 9040. The debtors as at 31.12.1989 were Rs. 224000. Provision for Bad debt@5% is
maintained by the business . Bad debts during the year 1990 and 91 were rs. 11680 and 4160
respectively. The sundry debtors as at Rs. 31.12.90 and 31.12.1991 were rs. 288000 and rs. 136000.
Prepare necessary ledger account in the books of A & Co. and also how it would appear in the P/L A/c
for the year 1989 and 1990.
Prob 2:
A ltd. Makes provision for doubtful debts at the end of each year against specific debtors.
On 31.12.1985 the undermentioned debtors balances were considered doubtful and provided for B – Rs.
1500 : C – 400: D—250
Write up the bad debts account and PBDD for the year ended 1986.
Such discount will be taken in the next year but should be taken into account in currents year
account. It is related to creditors. So we will create a reserve for discount on creditors.
Journal Entries :
1. When discount is received from the creditors.
At the end of the accounting year the discount received account is closed by transferring it ot
the reserve for discount on creditors account :
Discount Received ---------------------------Dr.
To Reserve for discount on creditors A/C
**** Calculation