CA Foundation · Accounting · Final Accounts of Sole Proprietors
A trial balance shows Sundry Debtors Rs 3,00,000 and Bad Debts Rs 5,000. Adjustments: write off further bad debts of Rs 10,000 and then maintain a provision for doubtful debts at 5% of remaining debtors. There was no opening provision. What total amount is charged to the Profit and Loss Account for bad debts and provision?
The total charge is Rs 29,500. Bad debts of Rs 5,000 in the trial balance and Rs 10,000 further written off total Rs 15,000. Provision is 5% of the remaining debtors of Rs 2,90,000, which is Rs 14,500. Adding these gives Rs 29,500.
- ARs 29,500Correct
- BRs 14,500
- CRs 30,000
- DRs 24,500
Explanation
Debtors after write-off = 3,00,000 - 10,000 = 2,90,000. Provision at 5% = 14,500. Total charge = existing bad debts 5,000 + further bad debts 10,000 + provision 14,500 = 29,500. Rs 14,500 omits the bad debts, and Rs 30,000 uses 5% on the unadjusted debtors.
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