Note : A Provision for doubtful debts is made always ‘ondebtor after deducting the amount of bad debts siven in adjustment. Case 1. When provision for doubtful debts is not ‘appearing on the Trial Balance. Profit and Loss A/c Dr. To Provision for doubtful debts A/c. (Being provision made on debtors) Note : In this case provision for doubtfu debts will be debited to Profit and Loss A/c and Amount of debtors will reduced by it. Case 2. When Provision for doubtfur debts is appearing in Trial Balance. (Old Provision) ‘Accounting Entries : (old + New Bad debts) (9 For adjusting bad debts (old + New Bad Debts) Provision for doubtful debts A/c Dr To Bad Debts A/c (Being bad debts written from old provision)(ii) for creating New provision : with the amount of difference : Profit and Loss A/c Dr. To Provision for doubtful debts A/c (New provision debts [old Provision total Bad debts] ) Mlustration No. 7. Trial Balance Ason... Particulars Dr Ce Bad Debis 3,000 Privision for doubtful debts 5,000 Sundry Debtors 151,000 Additional Infomation : Further Bad Debts amounted Rs. 1,000 and create provision for Doubtful Debts @ 5%.Profit and Loss Account for the year ended. Dr ce Paricalare @_ [Particulars z ‘To Bad Deity 3.000 ‘Ada farther Bad Debts 1.000 4,000 ‘Add: New Provision 7.500 1.50,000@%) 11500 Less-OldProvision 5,000 [6500] Balance Sheet Asoa, Assets ‘Suey Debtors 151,000 Less Farther Bad debts =1000 1,50,000 forDoubful Debts 7.500 12,500