Académique Documents
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Lecture 25
Recording of Provision
Debit Credit Profit and Loss Account Provision for Bad and Doubtful Debts
Financial Accounting
Lecture 25
Financial Accounting
Lecture 25
100,000 (5,000)
95,000
Financial Accounting
Lecture 25
Financial Accounting
Lecture 25
Financial Accounting
Lecture 25
Example
Following
information is available for A Ltd. For the year ended June 30, 20--. Bad Debts During the year November 1,100 January 640 April 120 At the year end total debtors amounted to Rs. 68,000 out which Rs. 2,200 is considered to be doubtful / bad. Show the relevant accounts and extracts from Profit and Loss and Balance Sheet.
Financial Accounting
Lecture 25
Example
A Ltd.
Date 20-Nov Jan Apr June 30 Vr. #
Account Code -CR. Amount Balance Dr/(Cr) 1,100 1,740 1,860 1,860 0
Financial Accounting
Lecture 25
Example
A Ltd. Date 20-Jun 30 Bad and Doubtful Debts Provision for the Year (P&L) Vr. # Narration / Particulars Provision for the Year Ledger Code DR. Amount 2,200 Account Code -Balance Dr/(Cr) 2,200
CR. Amount
Provision for Bad and Doubtful Debts (B/S) Narration / Particulars Provision for the Year Ledger Code DR. Amount
Financial Accounting
Lecture 25
Example
A Ltd. Date 20-Jun 30 Jun 30 A Ltd. Date 20-Jun 30 Vr. # Bad and Doubtful Debts Provision for the Year (P&L) Vr. # Narration / Particulars Provision for the Year Transfer to P&L Provision for Bad and Doubtful Debts (B/S) Narration / Particulars Provision for the Year Ledger Code DR. Amount Ledger Code DR. Amount 2,200 2,200 Account Code -Balance Dr/(Cr) 2,200 0
CR. Amount
Financial Accounting
Lecture 25
Presentation
A Ltd. Profit and Loss Account for the year ended June 30, 20 Gross Profit ------Less: Expenses Bad Debts (1,860) Provision for bad debts (2,200)
Extract of Balance Sheet As On June 30, 20-Current Assets Debtors Provision for Bad Debts 68,000 (2,200)
65,800
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Financial Accounting
Lecture 25
Example 2
business creates a provision for bad debts @ 5% of its debtors on balance sheet date. On Jan 01, 20-- the balance of Provision was 6,600. During the year debts written off amounted to Rs. 5,400. On December 31, 20--, debtors totaled Rs. 62,000. Show Bad debts Account and provision for bad debts account.
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Financial Accounting
Lecture 25
Solution
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Financial Accounting
Lecture 25
Example 2
Provision for Bad and Doubtful Debts Account (B/S) Date 20-Jan 01 Dec 31 Vr. # Narration / Particulars Opening Balance Bad Debts Provision for bad debts 5,400 Ledger Code DR. Amount
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Financial Accounting
Lecture 25
Presentation
58,900
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Financial Accounting
Lecture 25
Control Accounts
In
general ledger summarized record is maintained in the account called Control Account. Separate control account is used for Debtors and Creditors. of individual accounts are kept in a separate Register / Ledger called subsidiary ledger.
Details
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Financial Accounting
Lecture 25
Control Accounts
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Financial Accounting
Lecture 25
Cheques / Cash List of receipts is extracted from cash and bank book. Received Closing Balance This is the balancing figure, that can also be checked from the list of individual balance of debtors.
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Financial Accounting
Lecture 25
Control Accounts
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Financial Accounting
Lecture 25
Example
Prepare a Debtors control Account from the following data and work out the closing balance on May 31, of debtors. May 1 Opening Balance 55,000 Totals for May Total Credit Sales 45,000 Returns Inward 8,000 Cheques and Cash received 40,000 Discounts allowed 4,500
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Financial Accounting
Lecture 25
Example
Debtors Control Account Account Code --
Debit Side
Date May01 May31 No Narration Opening Bal Total sales Dr. Rs. Date No 55,000 May31 45,000 May31 May31
Credit Side
Narration Returns Receipts Discounts Bal C/F Cr. Rs. 8,000 40,000 4,500
100,000
May31 100,000
52,500
47,500 100,000
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Financial Accounting
Lecture 25
Example 2
Prepare a Creditors Control Account from the following work out the closing balance on April 30, of creditors. Apr. 1 Opening Balance Totals for May Total Credit Purchases Purchase Return Cheques and Cash paid Discounts received data and 44,500 32,000 6,200 28,800 2,500
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