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a bad debts of rs 1560 had not been written off and provision for doubtful debts should have been maintained at 10% of trade receivables which are shown in the trial balance at rs 23390 with a credit provision for bad debtsat rs 2320
? Related: Unit 6: Rectification of Errors - 1
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a bad debts of rs 1560 had not been written off and provision for doub...
Rectification of Errors: Bad Debts and Provision for Doubtful Debts
The given situation requires the rectification of errors related to bad debts and provision for doubtful debts. The following steps can be taken to correct the errors:
Identification of Errors
- Bad debts of Rs. 1560 had not been written off.
- Provision for doubtful debts should have been maintained at 10% of trade receivables.
- Trade receivables are shown in the trial balance at Rs. 23390 with a credit provision for bad debts at Rs. 2320.
Correction of Errors
1. Writing off Bad Debts
- The unrecorded bad debts of Rs. 1560 should be written off from the trade receivables.
- The entry will be:
Bad Debts A/c 1560
To Trade Receivables A/c 1560
2. Creating Provision for Doubtful Debts
- The provision for doubtful debts should be maintained at 10% of trade receivables.
- The existing credit balance of Rs. 2320 should be adjusted to the required amount.
- The entry will be:
Provision for Doubtful Debts A/c (10% of 23390) 2340
To Provision for Doubtful Debts A/c 2320
3. Adjustment of Trade Receivables
- The trade receivables should be reduced by the amount of bad debts written off and provision for doubtful debts created.
- The entry will be:
Trade Receivables A/c 390
To Bad Debts A/c 1560
To Provision for Doubtful Debts A/c 2340
Verification of Rectification
- The trial balance should be prepared again to verify the correctness of the rectification entries.
Conclusion
By following the above steps, the errors related to bad debts and provision for doubtful debts have been corrected. It is important to maintain accurate records of bad debts and provision for doubtful debts to ensure the financial statements reflect the true financial position of the company.
The given situation requires the rectification of errors related to bad debts and provision for doubtful debts. The following steps can be taken to correct the errors:
Identification of Errors
- Bad debts of Rs. 1560 had not been written off.
- Provision for doubtful debts should have been maintained at 10% of trade receivables.
- Trade receivables are shown in the trial balance at Rs. 23390 with a credit provision for bad debts at Rs. 2320.
Correction of Errors
1. Writing off Bad Debts
- The unrecorded bad debts of Rs. 1560 should be written off from the trade receivables.
- The entry will be:
Bad Debts A/c 1560
To Trade Receivables A/c 1560
2. Creating Provision for Doubtful Debts
- The provision for doubtful debts should be maintained at 10% of trade receivables.
- The existing credit balance of Rs. 2320 should be adjusted to the required amount.
- The entry will be:
Provision for Doubtful Debts A/c (10% of 23390) 2340
To Provision for Doubtful Debts A/c 2320
3. Adjustment of Trade Receivables
- The trade receivables should be reduced by the amount of bad debts written off and provision for doubtful debts created.
- The entry will be:
Trade Receivables A/c 390
To Bad Debts A/c 1560
To Provision for Doubtful Debts A/c 2340
Verification of Rectification
- The trial balance should be prepared again to verify the correctness of the rectification entries.
Conclusion
By following the above steps, the errors related to bad debts and provision for doubtful debts have been corrected. It is important to maintain accurate records of bad debts and provision for doubtful debts to ensure the financial statements reflect the true financial position of the company.
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a bad debts of rs 1560 had not been written off and provision for doubtful debts should have been maintained at 10% of trade receivables which are shown in the trial balance at rs 23390 with a credit provision for bad debtsat rs 2320 Related: Unit 6: Rectification of Errors - 1?
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a bad debts of rs 1560 had not been written off and provision for doubtful debts should have been maintained at 10% of trade receivables which are shown in the trial balance at rs 23390 with a credit provision for bad debtsat rs 2320 Related: Unit 6: Rectification of Errors - 1? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about a bad debts of rs 1560 had not been written off and provision for doubtful debts should have been maintained at 10% of trade receivables which are shown in the trial balance at rs 23390 with a credit provision for bad debtsat rs 2320 Related: Unit 6: Rectification of Errors - 1? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for a bad debts of rs 1560 had not been written off and provision for doubtful debts should have been maintained at 10% of trade receivables which are shown in the trial balance at rs 23390 with a credit provision for bad debtsat rs 2320 Related: Unit 6: Rectification of Errors - 1?.
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