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Gupta Brothers' trial balance shows Sundry Debtors of Rs 2,00,000 and Provision for Doubtful Debts of Rs 8,000 at the start. Further bad debts of Rs 10,000 are to be written off, and the provision is to be maintained at 5% of the remaining debtors. What is the total amount charged to the Profit and Loss Account for bad debts and provision?

The charge is Rs 11,500. Debtors after writing off Rs 10,000 are Rs 1,90,000, so the required provision is Rs 9,500. Against the existing Rs 8,000, an extra Rs 1,500 is needed, which is added to the Rs 10,000 bad debts written off.

  1. ARs 9,500
  2. BRs 11,500Correct
  3. CRs 10,000
  4. DRs 18,000

Explanation

Debtors after write-off = 2,00,000 - 10,000 = 1,90,000. Required provision = 5% = Rs 9,500. Existing provision is Rs 8,000, so Rs 1,500 is added. Total charge = bad debts 10,000 + increase 1,500 = Rs 11,500. Rs 9,500 wrongly ignores bad debts and the old provision.

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