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Bad Debts and Provisions in P&L Account

This document is the Trading and Profit & Loss account for the year ending 31st March 2010. It shows revenues of Rs. 1,75,000 from sales and Rs. 46,000 brought forward from gross profits. Expenses include purchases of Rs. 1,26,000, carriage and various operating costs. Depreciation was Rs. 3,500 and salaries were Rs. 10,000. Net profit for the year was Rs. 25,500. An adjustment was made to the provision for bad debts of Rs. 250 to correctly account for it.

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Himank Bhanot
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186 views2 pages

Bad Debts and Provisions in P&L Account

This document is the Trading and Profit & Loss account for the year ending 31st March 2010. It shows revenues of Rs. 1,75,000 from sales and Rs. 46,000 brought forward from gross profits. Expenses include purchases of Rs. 1,26,000, carriage and various operating costs. Depreciation was Rs. 3,500 and salaries were Rs. 10,000. Net profit for the year was Rs. 25,500. An adjustment was made to the provision for bad debts of Rs. 250 to correctly account for it.

Uploaded by

Himank Bhanot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Change on pg 67 in TAU material

Trading, Profit and Loss Account for the year ended 31st March, 2010
Particulars
To Opening Stock
To Purchases
Less: Purchase Return
To Carriage Inward
To Direct Expenses
To Gross Profit c/d
To Carriage outward
To Discount allowed
To Commission allowed
To Stationary Expense Paid
To General Expenses
To Depreciation on Plant &
Machinery
Depreciation on Buildings
To Salaries
Less: Prepaid
To Rent Paid
Add: Outstanding Rent
To Bad Debts
Add: Provision for Bad &
Doubtful Debts

Amount
Particulars
Rs.
20,000 Sales
1,77,500
1,26,000
Less: Sales Return
2,500
1000 1,25,000 By Closing Stock
2,500
2,500
46,000
1,96,000
500 By Gross Profit b/d
1,000 By Rent Received
500 By Discount Received
2,500 By excess provision
for doubtful debts
2,500
1,000

Amount
Rs.
1,75,000
21,000

1,96,000
46,000
1,500
1,500
250

500
10,000
500
1,500
500

9,500
2,000
750

750

(New)
Less: Existing provision for
Doubtful Debts

1,000

****

(Old))
To Taxes and Insurance
To Interest on Capital
To Net Profit c/d

1,500
1,500
25,500
49,250

**** you can not write -250 in Dr. side so it is written as 250 on credit side.

49,250

Another method of presentation for the same transactions:


Either as per Green colour or as per Red colour ; In both the ways finally P& L a/c dr by Rs.500
Dr.
Bad debts(From Trial balance)

750

Balance c/d(New provision: 5% 750


on Debtors 15000*5% = 750
1500

Provision for Bad Debts


Balance B/d (Existing from trial 1000
balance)
Profit & loss account
500
1500

Cr.

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