Financial Statements 2 Questions and Answers Class 11 Accountancy Chapter 10. Question 1. It is desired to maintain a provisionforbaddebts of Rs. 1,000. Question 2. (a) Debit outstanding rent account and Credit rent account. (b) Debit profit and loss account and Credit rent account.
(3) Journal entries for provisionsfor doubtful debts Note: Refer to Doubtful and BadDebts Financial Journal Entries for details on journal entries. (4) Writing off baddebts (a) The Director, Human Resources Service Centre will recommend a debt to be written off in accordance with the University of Sydney (Delegations of Authority) Rule 2020 ...
Journal Entries in Case of BadDebt and Provision There are two methods to record a company's BadDebt: The Direct Method and the Allowance Method. Direct Method The Direct Method directly records baddebts against the receivable account. In turn, the total collectible is reduced and so does the Net Income of the company.
The double entry would be: Debit bad debt provision expense P+L £100. Credit Bad provision £100 B/S. If however, we had calculated that the provision should have been £400, we would have to reduce our provision. To reduce a provision, which is a credit, we enter a debit. The other side would be a credit, which would go to the bad debt ...
The journalentry to create provision is shown below: Baddebt expense DR Provisionforbaddebt CR The provisionforbaddebt is estimated each year at the end of the accounting period. This way the matching principle of accounting is followed and no GAAP is violated.
