In year 2010 Mr. Alam had credit sales of Rs 850,000.

At the year end

his accounts receivable balance was Rs 115,000, and balance in
provision for bad debts was Rs 28000.

During the year 2011 he further made credit sales of Rs 1145,000and

accounts receivable at the end of the year were Rs 310,000.

i. If during the 2011 his bad debts were equal to Rs 32000 and he
had no allowance for bad debts and wanted to directly write
off the accounts, pass the journal entry.
ii. Suppose had had the provision balance as shown on last day of
2010 and wanted to increase it to 40,000, please pass the entry
iii. Suppose had had the provision balance as shown on last day of
2010 and wanted his reserve to increase by 15000 please pass
the entry
iv. Suppose he wants a provision equal to Rs 65000, and has the
previous balance (end of 2010) in provision, pass the journal
entry.
v. Suppose for requirement 2, a total of Rs 25000 worth accounts
went bad, pass the entry

Solution:

Date Particulars Dr Cr
Bad Debts Expenses 32000
Accounts receivable 32000
2 Bad Debts Expenses 12000
Provision for bad debt 12000
3 Bad Debts Expenses 15000
Provision for bad debt 15000
4 Bad Debts Expenses 37000
Provision for bad debt 37000
5 Provision for Bad Debts 25000
Accounts receivable 25000

ABC and Co

Partial balance sheet

As on December 31st, 2011

Current Assets:

Accounts receivable 285000

Provision for Bad Debts (15000)

270,000