Answer:

When provision for doubtful debt account is credited, the Debtors account is debited.

Explanation:

• Provision for doubtful debts is an estimated amount that is set aside to cover any potential losses due to non-payment of debts by customers.

• The provision for doubtful debts account is a contra account to the accounts receivable account.

• When a provision for doubtful debts account is credited, it indicates that the company is setting aside an amount to cover any potential losses due to bad debts.

• The entry for this transaction is as follows:

Provision for doubtful debts account -------------- Credit

Debtors account ------------------------------------------- Debit

• The Debtors account is debited because it is the account that is affected by the estimated bad debts.

• The provision for doubtful debts account is credited as it is a contra account to accounts receivable and represents the estimated amount of bad debts that the company is setting aside.

• By setting aside an estimated amount for bad debts, the company is reducing the value of accounts receivable, which in turn reduces the company's net income.

• The provision for doubtful debts account is also used to reduce the accounts receivable account on the balance sheet.

• The provision for doubtful debts account is not used to write off bad debts, but rather to estimate the potential losses due to bad debts.

• The bad debt account is used to write off actual bad debts, and the profit and loss account is used to record the expense of bad debts.

In conclusion, when provision for doubtful debt account is credited, the Debtors account is debited because it is the account affected by the estimated bad debts.