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Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were Rs. 90,000. Provision for bad-debts required @ 1% which of the following journal Entry will be passed on 31.3.09?
- a)P & L A/c Dr. 100
To Provision for Doubtful debts 100 - b)Provision for Doubtful debts Dr. 100
To P&L A/c 100 - c)P & L A/c Dr. 900
To Provision for Doubtful debts 900 - d)No entry will be passed.
Correct answer is option 'B'. Can you explain this answer?
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Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-0...
At the beginning of the year provision for bad debts is Rs. 1000 and at the closing date of year total provision to be made only for Rs. 900 ( 1% of debtors = 1% of 90000 = Rs. 900 ) here provision for bad debts is made extra amounted to Rs. 100. (provision made - provision to be made) so this extra 100 Rs. that had been transferred to provision for bad debts A/c will be transferred to P & L A/c. and consequently entry will be ; DR. provision for bad debts A/c. CR. P & L A/c by RS 100
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Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-0...
To calculate the required provision for doubtful debts as of 31.3.09:
Given:
- Provision for bad debts as on 1.4.08 = Rs. 1,000
- During the year 2008-09, there were no bad debts.
- Debtors as on 31.3.09 = Rs. 90,000
- Provision for bad debts required @ 1%
Step-by-step calculation:
- Calculate the required provision for doubtful debts as on 31.3.09: Provision required = 1% of Debtors as on 31.3.09 = 1% of Rs. 90,000 = Rs. 900
- Determine the adjustment needed in the provision account:
- Opening balance of Provision for bad debts (1.4.08) = Rs. 1,000
- Required provision as on 31.3.09 = Rs. 900
- Adjustment required = Rs. 900 - Rs. 1,000 = Rs. -100 (a decrease in provision)
Journal entry to adjust Provision for Doubtful Debts on 31.3.09:
The provision is being reduced, so we credit Provision for Doubtful Debts.
Option 2 correctly represents this adjustment:
Provision for Doubtful debts Dr. 100 To P&L A/c 100
This entry reflects the decrease in the provision for bad debts from the opening balance to the required amount as of the end of the period. Therefore, Option 2 is the correct journal entry to pass on 31.3.09.
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Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were Rs. 90,000. Provision for bad-debts required @ 1% which of the following journal Entry will be passed on 31.3.09?a)P & L A/c Dr. 100To Provision for Doubtful debts 100b)Provision for Doubtful debts Dr. 100To P&L A/c 100c)P & L A/c Dr. 900To Provision for Doubtful debts 900d)No entry will be passed.Correct answer is option 'B'. Can you explain this answer?
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Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were Rs. 90,000. Provision for bad-debts required @ 1% which of the following journal Entry will be passed on 31.3.09?a)P & L A/c Dr. 100To Provision for Doubtful debts 100b)Provision for Doubtful debts Dr. 100To P&L A/c 100c)P & L A/c Dr. 900To Provision for Doubtful debts 900d)No entry will be passed.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were Rs. 90,000. Provision for bad-debts required @ 1% which of the following journal Entry will be passed on 31.3.09?a)P & L A/c Dr. 100To Provision for Doubtful debts 100b)Provision for Doubtful debts Dr. 100To P&L A/c 100c)P & L A/c Dr. 900To Provision for Doubtful debts 900d)No entry will be passed.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Provision for bad-debts as on 1.4.08 Rs. 1,000, during the year 2008-09 there were no bad-debts and debtors as on 31.3.09 were Rs. 90,000. Provision for bad-debts required @ 1% which of the following journal Entry will be passed on 31.3.09?a)P & L A/c Dr. 100To Provision for Doubtful debts 100b)Provision for Doubtful debts Dr. 100To P&L A/c 100c)P & L A/c Dr. 900To Provision for Doubtful debts 900d)No entry will be passed.Correct answer is option 'B'. Can you explain this answer?.
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