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From the following information find the amount to be debited to P & L A/c for the period ending 31-03-2014. Provision for doubtful debts - Rs. 800 (on 01-04-2013)
Debtors on 31-03-2014 - Rs. 40,000
Bad debts - Rs. 2,000
Bad debts to be written off and provision for doubtful debts is to be created @ 5% on debtors
- a)Rs. 3100
- b)Rs. 4000
- c)Rs. 3200
- d)Rs. 3900
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
From the following information find the amount to be debited to P &...
Debtor 40000
Less bad debt 2000
=38000×5%=1900
PBDD=40000×5%=2000-OLD PBDD
=2000-800=1200
1900+1200=3100
Less bad debt 2000
=38000×5%=1900
PBDD=40000×5%=2000-OLD PBDD
=2000-800=1200
1900+1200=3100
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Community Answer
From the following information find the amount to be debited to P &...
To find the amount to be debited to the P&L A/c for the period ending 31-03-2014, we need to calculate the provision for doubtful debts and the bad debts to be written off.
Step 1: Calculate the provision for doubtful debts on 31-03-2014
Given: Provision for doubtful debts on 01-04-2013 = Rs. 800
Debtors on 31-03-2014 = Rs. 40,000
Provision for doubtful debts is to be created at 5% on debtors.
Provision for doubtful debts on 31-03-2014 = 5% of Rs. 40,000 = Rs. 2,000
Step 2: Calculate the bad debts to be written off
Given: Bad debts = Rs. 2,000
Step 3: Calculate the amount to be debited to the P&L A/c
The amount to be debited to the P&L A/c is the total of provision for doubtful debts and bad debts to be written off.
Amount to be debited to the P&L A/c = Provision for doubtful debts + Bad debts
= Rs. 2,000 + Rs. 2,000
= Rs. 4,000
Therefore, the correct answer is option B) Rs. 4,000.
Note: The statement that the correct answer is option A) Rs. 3,100 is incorrect based on the given information.
Step 1: Calculate the provision for doubtful debts on 31-03-2014
Given: Provision for doubtful debts on 01-04-2013 = Rs. 800
Debtors on 31-03-2014 = Rs. 40,000
Provision for doubtful debts is to be created at 5% on debtors.
Provision for doubtful debts on 31-03-2014 = 5% of Rs. 40,000 = Rs. 2,000
Step 2: Calculate the bad debts to be written off
Given: Bad debts = Rs. 2,000
Step 3: Calculate the amount to be debited to the P&L A/c
The amount to be debited to the P&L A/c is the total of provision for doubtful debts and bad debts to be written off.
Amount to be debited to the P&L A/c = Provision for doubtful debts + Bad debts
= Rs. 2,000 + Rs. 2,000
= Rs. 4,000
Therefore, the correct answer is option B) Rs. 4,000.
Note: The statement that the correct answer is option A) Rs. 3,100 is incorrect based on the given information.
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From the following information find the amount to be debited to P & L A/c for the period ending 31-03-2014. Provision for doubtful debts - Rs. 800 (on 01-04-2013)Debtors on 31-03-2014 - Rs. 40,000Bad debts - Rs. 2,000Bad debts to be written off and provision for doubtful debts is to be created @ 5% on debtorsa)Rs. 3100b)Rs. 4000 c)Rs. 3200d)Rs. 3900Correct answer is option 'A'. Can you explain this answer?
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