2023 · Q118
Following is the Trial Balance of a firm as on 31-12-2022: The additional bad debts during the year are 2,00,000. The firm has a policy of maintaining a provision for doubtful debts equal to 10% of the trade receivables' balances. The total amount to be charged to Profit and Loss A/c (for the year ending 31-12-2022) for bad debts written off and provision created will
General Accounting Principles, Auditing and InsuranceRecording transactions
- A₹ 2,50,000
- B₹ 1,30,000
- C₹ 90,000
- D₹ 3,30,000
Explanation
The new provision is 10% of receivables after the additional write-off: 10% x (25,00,000 - 2,00,000) = Rs. 2,30,000. The P&L charge = bad debts written off (40,000 + 2,00,000) + new provision (2,30,000) - existing provision (1,40,000) = Rs. 3,30,000. Hence D.