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What is journal entry to create the Provision for Bad &
Doubtful debts?
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Answer / rupali
Bad Debts A/c dr.
To Provision for Bad & Doubtful Debts Cr.
| Is This Answer Correct ? | 159 Yes | 72 No |
Answer / k. phalguna rao
1) Bad Debts means we can expect to not receive the money
(cash/bank) from the customer (sundry Debtors) towards
goods sold to him so if the money is not received from the
customer,it is loss to the company hence losses to be
debited as Bad debits and credit to the customer (Sundry
Debtors - Current Asset) hence the current asset value
decreased
2) Provision for Bad Debts: In the business we can not
expect how much will be the bad debts because to increase
our sales and to competite with opponents we have to give
the goods / services in credit hence to protect from this
risk every compnay made a provision for Bad Debts from
Sundry Debitors
Note: if Bad Debits happen in the current financial year
first we should be adjusted from the Provision for Bad
Debts, if the bad debts crossess than provison for bad
debts then balance amount reduced from Sundry Debtors
suppose sundry debtors worth 50000.00
allow 5% on debtors for provision for bad dabts & 10% for
Bad dabts in the year end after adjust from the provision
Provision for Bad Debits A/c Dr. 2500 (50000x5% = 2500.00)
To Sundra Debtors 2500
Actual Bad Debts = 50000 x 10% = 5000.00
(BD=5000-2500(PBD) = Balance Bad Debts is 2500
Bad Debts A/c Dr. 2500
To Sundry Debtors 2500
| Is This Answer Correct ? | 66 Yes | 20 No |
Answer / murli vohra
The correct entry to create provision for Bad Debt is
P&l a/c- dr
To Provision for bad debt
| Is This Answer Correct ? | 56 Yes | 25 No |
Answer / premsundar
You should first recognize that a Provision is made just to hold back the profits you might otherwise distribute as a dividend Distribution of dividends de-recognizing possible losses would amount to 'repayment of capital'; a process that can be gone through only under the provisions of Sec 100 of the cos Act
The entry
Doubtful debts a/c Dr
To Provision for Bad and Doubtful debts
Year end
P&L a/c Dr
To Doubtful debts a/c
( This is a Closing entry)
In the Balance sheet, the Provision for bad and Doubtful debts a/c is shown as a deduction from Sundry debtor's a/c This satisfies the MATCHING PRINCIPLE and the concept of Prudence
When Bad Debts are actually incurred later they need to be set off against the Provision already created for the purpose
Bad debts a/c Dr---
To Sundry Debtors a/c----
Prov for Bad & Doubtful debts Dr---
To Bad debts a/c
Recognize that P&L a/cdoes not suffer a debit again
To
| Is This Answer Correct ? | 35 Yes | 4 No |
Answer / karthik
Profit and loss account...dr
To provision for doubtful debts a/c
| Is This Answer Correct ? | 19 Yes | 3 No |
Answer / prasanna
Profte and loss account Dr
To Provision for bad debts
Being amount in P and L account is reduced in order to maintain the provisions
| Is This Answer Correct ? | 6 Yes | 0 No |
Answer / kapil kumar
P&l account debit
To Provision for bad debts
(Being provision is created for bad debts)
| Is This Answer Correct ? | 4 Yes | 0 No |
Answer / kittu
Profit and loss a/c DR
To provision for debate A/c
| Is This Answer Correct ? | 5 Yes | 3 No |
Answer / sougata dasgupta
Provision for bad debt A/C.......Dr
To Sundry debtors A/C
Being provision charged to sundry debtors in order to meet future losses for bad debts
| Is This Answer Correct ? | 3 Yes | 2 No |
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