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Discount received = Rs. 1,000 Provision for discount on creditors = Rs. 1,600 It is desired to make a provision of Rs. 1,100 on creditors. Find out the amount to be transferred to Profit & Loss A/c
- a)Rs. 500
- b)Rs. 3,500
- c)Rs. 1,000
- d)Rs. 1,500
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Discount received = Rs. 1,000 Provision for discount on creditors = Rs...
Balance Provision after discount received = 1,600 - 1,000 = 600
Provision to be created = 1,100 - 600 = Rs 500 (amount to be transferred to Profit & Loss A/c)
Most Upvoted Answer
Discount received = Rs. 1,000 Provision for discount on creditors = Rs...
As per the formula of discount received;
discount received
+ new RFDC
- OLD RFDC
So, here discount received is ₹1000, new provision (RFDC) ₹ 1100 and old provision (RFDC) ₹1600.
by applying formula we get,
₹500
discount received
+ new RFDC
- OLD RFDC
So, here discount received is ₹1000, new provision (RFDC) ₹ 1100 and old provision (RFDC) ₹1600.
by applying formula we get,
₹500
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Community Answer
Discount received = Rs. 1,000 Provision for discount on creditors = Rs...
To find out the amount to be transferred to Profit and Loss Account, we need to calculate the excess provision for discount on creditors.
Given information:
Discount received = Rs. 1,000
Provision for discount on creditors = Rs. 1,600
Desired provision for discount on creditors = Rs. 1,100
Calculations:
1. Excess provision for discount on creditors:
Excess Provision = Provision - Desired Provision
Excess Provision = Rs. 1,600 - Rs. 1,100
Excess Provision = Rs. 500
2. Amount to be transferred to Profit and Loss Account:
Amount = Excess Provision - Discount Received
Amount = Rs. 500 - Rs. 1,000
Amount = Rs. -500
Explanation:
The calculation shows that the amount to be transferred to Profit and Loss Account is Rs. -500. However, this result is not possible as it indicates a negative amount. Therefore, it must be a mistake in the calculation or the given information.
The correct amount to be transferred to Profit and Loss Account cannot be determined with the given data. We cannot have a negative amount to be transferred.
Hence, option 'A' (Rs. 500) cannot be the correct answer.
Given information:
Discount received = Rs. 1,000
Provision for discount on creditors = Rs. 1,600
Desired provision for discount on creditors = Rs. 1,100
Calculations:
1. Excess provision for discount on creditors:
Excess Provision = Provision - Desired Provision
Excess Provision = Rs. 1,600 - Rs. 1,100
Excess Provision = Rs. 500
2. Amount to be transferred to Profit and Loss Account:
Amount = Excess Provision - Discount Received
Amount = Rs. 500 - Rs. 1,000
Amount = Rs. -500
Explanation:
The calculation shows that the amount to be transferred to Profit and Loss Account is Rs. -500. However, this result is not possible as it indicates a negative amount. Therefore, it must be a mistake in the calculation or the given information.
The correct amount to be transferred to Profit and Loss Account cannot be determined with the given data. We cannot have a negative amount to be transferred.
Hence, option 'A' (Rs. 500) cannot be the correct answer.
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Discount received = Rs. 1,000 Provision for discount on creditors = Rs. 1,600 It is desired to make a provision of Rs. 1,100 on creditors. Find out the amount to be transferred to Profit & Loss A/ca)Rs. 500b)Rs. 3,500c)Rs. 1,000d)Rs. 1,500Correct answer is option 'A'. Can you explain this answer?
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