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Prepare bed that's account provision for bad that's account under each of the above method from the following information and also the profit and loss account and balance sheet first January 2012 provision for bed dead 535 December 2012 by return of 3000?
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Prepare bed that's account provision for bad that's account under each...
Provision for Bad Debts Calculation
To prepare the provision for bad debts account, we start with the provided information:
- Opening Provision for Bad Debts (1st January 2012): 535
- Bad Debts Written Off during the year (December 2012): 3000
### Methods of Provisioning
1. Percentage of Debtors Method
- If we assume a certain percentage of debtors is expected to be uncollectible, we will calculate the provision based on that percentage.
2. Historical Experience Method
- This method looks at previous years' bad debts as a percentage of total debtors and applies it to the current year's debtors.
### Provision for Bad Debts Account
- Opening Balance: 535
- Add: Bad Debts Written Off: 3000
- Closing Balance: This will need to be calculated based on the chosen method.
### Profit and Loss Account
- Bad Debts Expense:
- Include the amount of bad debts written off.
- Example: If using the percentage method, add the calculated provision to the bad debts expense.
### Balance Sheet Treatment
- Debtors (Accounts Receivable):
- Show the total debtors at year-end.
- Less: Provision for Bad Debts:
- Deduct the closing provision from total debtors to show net realizable value.
### Example Calculation
Assuming we need to maintain a provision of 5% on total debtors of 60,000:
- Required Provision: 5% of 60,000 = 3000
- Adjustments:
- Opening provision + Bad debts written off - Closing provision = Adjusted balance.
### Final Notes
- Ensure compliance with accounting standards regarding bad debts.
- Regular review of debtors is crucial for accurate provisioning.
This structured approach will help ensure accurate financial reporting and management of bad debts.
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Prepare bed that's account provision for bad that's account under each of the above method from the following information and also the profit and loss account and balance sheet first January 2012 provision for bed dead 535 December 2012 by return of 3000?
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Prepare bed that's account provision for bad that's account under each of the above method from the following information and also the profit and loss account and balance sheet first January 2012 provision for bed dead 535 December 2012 by return of 3000? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Prepare bed that's account provision for bad that's account under each of the above method from the following information and also the profit and loss account and balance sheet first January 2012 provision for bed dead 535 December 2012 by return of 3000? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Prepare bed that's account provision for bad that's account under each of the above method from the following information and also the profit and loss account and balance sheet first January 2012 provision for bed dead 535 December 2012 by return of 3000?.
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